The Full Federal Court has allowed an appeal by James Mawhinney to overturn a 20-year ban restraining him from advertising investments and raising funds from the public through financial products.
Mr Mawhinney is the director of various companies in the Mayfair 101 Group. On 19 April 2021, the Federal Court granted the restraining order against Mr Mawhinney after finding that he engaged in 'serious, incompetent and reckless' conduct (21-076MR). Mr Mawhinney appealed that decision.
The Full Court allowed the appeal on the ground that Mr Mawhinney was denied procedural fairness because ASIC had not sought certain findings of contraventions, but the primary judge made and relied on those findings in making the restraining order. The remaining grounds were dismissed.
The Full Court also ordered that ASIC's application for injunctions against Mr Mawhinney be remitted to the Federal Court for another hearing, calling the case 'very exceptional' and acknowledging that it 'involves issues concerning the need for protection of the public from potentially serious harm.'
Pending the final determination of the matter, the Full Court reinstated the interim injunctions made in August 2020 restraining Mr Mawhinney, and any company of which he is an officer or shareholder, from:
- Receiving or soliciting funds in connection with any financial product
- Advertising or promoting any financial product, and
- Removing from Australia any assets acquired with funds received in connection with any financial product.
ASIC Deputy Chair Sarah Court said, 'ASIC took this case to protect the public from the risk of significant financial harm arising from what we believed to be serious misconduct. Mayfair, under Mr Mawhinney's direction, marketed high-risk products as low risk. Almost 500 people invested in the Mayfair 101 group and they are still owed a total of approximately $211 million.
'ASIC will carefully consider today's judgment and evaluate our next steps. Meanwhile, as part of today's decision, the Court has reinstated injunctions we had previously obtained against Mr Mawhinney. These measures will prevent further investor harm while proceedings are ongoing,' concluded Ms Court.
