Australian Securities and Investments Commission v Linchpin Capital Group Ltd

The Australian Securities and Investments Commission (ASIC) sought to appoint receivers to the assets of Linchpin Capital Group Ltd (Linchpin) in relation to the operation of an unregistered managed investment scheme, referred to as the “Investment Income Opportunity Fund” (the Unregistered Fund). The Federal Court was required to determine the nature and extent of the contraventions committed by Linchpin and the scope of the assets over which the receivers should be appointed. The court had to consider whether the Unregistered Fund was required to be registered under the Corporations Act, the veracity of Linchpin’s dealings, and whether Linchpin had rectified its position by becoming the authorised representative of an AFSL holder.

The court found that Linchpin had indeed engaged in activities in relation to the Unregistered Fund without holding the relevant Authorised Financial Services License (AFSL), which constituted a serious contravention of the Corporations Act. The court held that the Unregistered Fund was required to be registered, and that Linchpin’s failure to do so imperiled the investments made by its members. The court also found that Linchpin’s purported rectification of its position was ineffective. The court held that the receivers should be appointed to all of Linchpin’s assets, including those held by its directors and related entities, to ensure that the investments made by members of the Unregistered Fund were protected.

The court allowed ASIC’s application to appoint receivers to Linchpin’s assets and ordered that the receivers continue in their roles until the finalisation of the orders. The court also ordered that short minutes of the orders be brought in and that the orders made on 26 July 2018 continue until the finalisation of the orders in accordance with the court’s reasons.