Australian Securities and Investments Commission v Camelot Derivatives Pty Ltd (in liq)

The Australian Securities and Investments Commission (ASIC) filed a lawsuit against Camelot Derivatives Pty Ltd (in liquidation) and its principal, Mr King, alleging that they had made misleading and deceptive representations about their investment strategies, contravening s 1041H of the Corporations Act 2001 (Cth) and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth). ASIC also claimed that Mr King was liable as an accessory to Camelot's contraventions, and that both entities had breached the terms of their Australian Financial Services Licence (AFSL). The court was required to decide whether the representations made by Camelot and Mr King were indeed misleading or deceptive and whether they had failed to conduct their financial services business efficiently, honestly, and fairly.

The court found that Camelot and Mr King had made false or misleading representations to potential clients about the significant returns generated by investing in options trading and Camelot's experience in implementing a successful strategy. The court concluded that these representations were misleading or deceptive, as Camelot and Mr King had no reasonable basis for making them. Furthermore, the court found that Mr King was liable as an accessory to Camelot's contraventions of the Corporations Act and ASIC Act, as he knowingly caused Camelot to engage in misleading and deceptive conduct and was concerned in the contraventions. The court also determined that Camelot and Mr King had breached the terms of their AFSL by not acting in the interests of their clients and instead furthering their own interests.

The court considered the principles surrounding consent declarations and concluded that the requirement for a contradictor contesting the relief sought may be confined to declarations under specific legislation, and that the absence of a contradictor contesting the relief was but one of several factors relevant to the exercise of discretion. In this case, the court found that the requirement for a proper contradictor was satisfied, and it was both permissible and appropriate to make the relevant declarations by consent. The court granted the declarations and orders substantially in the form agreed between ASIC and Mr King, including declarations that Camelot and Mr King had engaged in misleading and deceptive conduct, and that Mr King was liable as an accessory to Camelot's contraventions. The court also imposed restraints on Mr King and Camelot, prohibiting them from providing financial services and making certain representations for specified periods.