The Australian Securities and Investments Commission has banned a New South Wales-based financial adviser from providing financial services for life and found he is “not of good fame or character”, after he used more than $1.8 million of clients money to pay for cosmetic surgery for his partner and repay debts to the “Wolf of Wall Street”, Jordan Belfort.
In 2014 ASIC started looking into the misappropriation of funds from the initial public offering of Elsmore Resources Ltd (ERL), which listed on the Australian Securities Exchange in 2013. A prospectus from 2013 described the company as “a mining and exploration company focused on exploration for Tin and Gem Stones in and around the New England region of NSW”.
Ashley Grant Howard was a director of Elsmore, and discoveries made by ASIC in the course of its investigation have led to Howard’s being permanently banned from providing financial services.
The findings include that Howard provided financial services when he was not licenced or authorised to do so, appropriated $1.8 million of clients’ funds and provided false documents to clients and third parties.
According to ASIC, the misappropriated funds went towards the purchase of a house, payment for cosmetic surgery for Howard’s partner, and settling debts that Howard had to the “Wolf of Wall Street” Jordan Belfort. Howard is currently a bankrupt.
The commission also found other compliance issues with Howard’s conduct, including failing to assist his trustee in bankruptcy by lodging a statement of affairs, and not assisting the liquidator of Meridien Capital Ltd, of which he was a director, because he did not provide a report on the company’s affairs.
ASIC’s investigation into Howard and other associated individuals is continuing and the regulator has indicated that Howard is able to appeal its decision to the Administrative Appeals Tribunal.
“Preying on the elderly and vulnerable”
Elsmore Resources, which has since been delisted from the ASX, has pursued its own legal proceedings to recover funds from Howard, and company chairman John Gaffney told SmartCompany this morning a lifetime ban from providing financial services was “not enough” given the damage caused.
“He blatantly stole over a million dollars and created havoc for the company,” Gaffney says.
“It’s ridiculous – I’m still trying to clean up the mess.”
ASIC Commissioner John Price said in a statement Howard’s conduct “was particularly bad in that, on occasions, he preyed on elderly and vulnerable people”.
Chief executive of Warfield and Associates and forensic accounting expert Brett Warfield says while big headlines about fraud come along every so often, business owners would be surprised at the widespread nature of poor financial advice.
While smaller fraud cases may not attract as much attention, Warfield told SmartCompany even one person losing $100,000 to poor advice or unscrupulous providers has a lasting impact.
It’s a reminder to do complete due diligence on those who might complete work for you – and this includes looking at to the media, the courts and ASIC.
“Have a look at the ASIC website for adverse findings, and look at Austlii [for civil cases],” Warfield says.
“Run the name and the company,” he says, adding that it can also be worthwhile searching for media reporting on any of the parties involved.
While it’s not uncommon to have a financial adviser or accountant recommended via word-of-mouth, even those recommendations should not necessarily be taken at face value, says Warfield.
“It’s really your own due dilligence, don’t rely on someone else,” he says.
“You’ve really got to be able to asking some hard questions.”
ASIC’s financial advisers register provides details on individuals and their financial services licences, which is useful for determining whether someone is legally able to give advice on certain products.
If an individual does not have a valid financial services licence, do not deal with them. “They are breaking the law and you will have little protection if things go wrong,” ASIC explains.
SmartCompany was unable to contact Ashley Grant Howard for comment prior to publication.