Downey and Australian Securities and Investments Commission

This matter concerned an appeal by Mr Downey against a decision by the Australian Securities and Investments Commission (ASIC) to impose a banning order. The dispute arose from Mr Downey's involvement in establishing the Silvergum Fund, intended to be a "complying investment" for the Significant Investor Visa program. ASIC alleged that Mr Downey engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in relation to financial products and services. The case was heard by Deputy C Kendall P of the Administrative Appeals Tribunal.

The Tribunal was required to determine whether the power to make a banning order against Mr Downey was enlivened, and if so, whether a banning order should be made and for what duration. Specifically, the Tribunal had to consider whether Mr Downey's conduct in relation to the Silvergum Fund, which did not hold an Australian Financial Services Licence (AFSL), contravened section 1041H(1) of the Corporations Act 2001, which prohibits misleading or deceptive conduct in relation to financial products or services. The Tribunal also had to assess the appropriate length of any banning order, considering ASIC's submission for a six-year ban and Mr Downey's arguments.

The Tribunal found that Mr Downey had engaged in misleading or deceptive conduct, agreeing with ASIC on this point. However, the Tribunal differed from ASIC regarding the intent behind Mr Downey's actions and the appropriate duration of the banning order. While ASIC contended that Mr Downey intentionally conspired to deceive, the Tribunal concluded that his conduct, though misleading, was more accurately characterised as extraordinarily reckless, bordering on incompetent, rather than malicious. Applying this assessment, the Tribunal determined that a four-year banning period was more appropriate than the six years sought by ASIC, finding that this duration would achieve the objective of the banning order.

Consequently, the Tribunal set aside ASIC's original decision and substituted its own. Mr Downey was banned under section 920A of the Corporations Act 2001 for a period of four years, commencing on 15 August 2016. This order prohibited him from providing any financial services during that period.