ASIC Enforcement Wrap: October 2026 | Forecasts, funerals and First Guardian: ASIC puts directors’ duties under the microscope

Key October Takeaways:

• Directors’ duties front and centre: Former Rex chief Lim Kim Hai was disqualified for four years and ordered to pay an $800,000 penalty for letting a profit forecast stand without reasonable grounds. The Supreme Court of NSW found that Rex’s former CEO breached his duties, and ASIC is seeking leave to appeal the finding that three former Rex non-executive directors did not.
• The First Guardian and Shield fallout continued to widen: ASIC sued a former adviser over advice that moved more than $25 million of superannuation into First Guardian, sued two Falcon Capital directors for various alleged contraventions, and banned a former MWL adviser for recommending Shield to clients.
• Disclosure and gatekeeper quality stayed under pressure: ASIC used stop orders against three mortgage and credit fund offerings, reported that audit quality is still falling short, accepted the cancellation of an auditor’s registration after surveillance, and issued $4.158 million in infringement notices to 21 companies within the Visy and Pratt group of companies for late financial reports.

Spotlight – Former Rex chief Lim Kim Hai disqualified for four years and ordered to pay $800,000 penalty

The Supreme Court of New South Wales has disqualified Lim Kim Hai, former Chief Executive Officer and Executive Chairman of Regional Express Holdings Ltd (Rex), from managing corporations for four years. By consent, the Court also ordered Mr Lim to pay an $800,000 pecuniary penalty and to contribute $150,000 towards ASIC’s legal costs, after he admitted breaching his duty of care and diligence under s 180 of the Corporations Act 2001 (Cth) and being knowingly involved in Rex’s continuous disclosure contraventions.

At the centre of the case was a statement of optimism. On 28 February 2023, Rex released an ASX announcement accompanying its half-year results, saying it was optimistic it would achieve positive operating profits for the full 2023 financial year, barring any further external shocks (the “2023 Profit Representation”). On Mr Lim’s admission, the Court accepted that Rex lacked reasonable grounds for that representation and that it was misleading. Mr Lim was directly involved in drafting and approving the announcement and was responsible for ensuring Rex complied with its continuous disclosure obligations.

The evidence showed that Mr Lim was closely involved in Rex’s operations: throughout early 2023 he received weekly and monthly reports revealing declining revenues, significant losses in both the domestic and regional airline operations, deteriorating cash flow and concerns about future profitability – yet the positive guidance remained in the market. Rex did not correct it until 20 June 2023, when it told the ASX to expect an operational loss of approximately $35 million for the financial year, and its share price fell by more than 12 per cent. Mr Lim admitted that he was aware of the relevant information, that a reasonable director in his position would have acted either to prevent the forecast being issued or to correct it, and that he was knowingly involved in the failure to disclose. Justice Black accepted the parties’ agreed facts and admissions.

The lesson is that optimism is not a defence. A profit forecast needs reasonable grounds when it is made and continuing scrutiny afterwards, and when the internal numbers move, the market must be told promptly. For directors and senior executives, accountability follows the information they actually receive.

The outcome sits alongside a very different result in the related case against three former Rex non-executive directors. Read the full judgment.  

ASIC has sought leave to appeal against that judgment (see Other Civil Actions below).

October in Summary – Enforcement Actions and Outcomes

Civil Action

Civil Proceedings

ASIC commenced two civil proceedings in the Federal Court:

• ASIC commenced civil penalty proceedings against Osama Saad, a former financial adviser, alleging that he carried out schemes to avoid the conflicted remuneration laws and contravened his best interests obligations. ASIC alleges that between February and December 2021, Mr Saad advised 217 clients to roll more than $25 million of superannuation into the First Guardian Master Fund, and that his entities, Atlas Marketing and United Capital, were paid around $34 million by entities connected to the Shield Master Fund and First Guardian. ASIC is seeking declarations, pecuniary penalties, orders restraining Mr Saad from providing financial services, and his disqualification from managing corporations. 
• ASIC commenced Federal Court proceedings against Falcon Capital directors David Anderson and Simon Selimaj, alleging that hundreds of millions of dollars of Australians’ superannuation held in the First Guardian Master Fund was exposed to high-risk, undocumented and conflicted investments. The allegations remain to be tested by the Court.

Civil Penalties

The Federal Court and the Supreme Court of New South Wales ordered civil penalties totalling $4.15 million against two companies and one individual:

• The Federal Court ordered Hollard Insurance Partners Limited to pay a $2 million penalty for a serious insurance claim delay. In October 2021, a family in regional Victoria lodged a home insurance claim after a storm badly damaged the roof of their home. Hollard initially accepted the claim but delayed for 15 months before reversing its decision and rejecting it. By then the home had deteriorated so far that it became uninhabitable. The Court found that Hollard breached its duty of utmost good faith through significant delays and poor communication in handling the claim. The case is a stark reminder that the duty of utmost good faith governs how insurers handle claims, not only whether they ultimately pay.
• The Supreme Court of New South Wales ordered Fortnum Private Wealth Ltd to pay a $1.35 million penalty for cybersecurity failures. Fortnum admitted that it failed to implement an adequate cybersecurity policy to manage risks and failed to implement adequate processes or systems to monitor the cybersecurity risks of its authorised representatives, contravening the Corporations Act 2001 (Cth). These failures exposed its authorised representatives and retail clients to serious harm and loss through cybercrime. Justice Black set the penalty to reflect Fortnum’s cooperation with ASIC and the fact that the failures were not deliberate. A licensee’s cyber obligations do not stop at its own systems: they extend to monitoring the risks its authorised representatives bring with them.
• The Supreme Court of New South Wales, by consent, ordered Lim Kim Hai to pay an $800,000 pecuniary penalty, disqualified him from managing corporations for four years and ordered him to contribute $150,000 towards ASIC’s costs, for breaches of his directors’ duties and his involvement in Rex’s continuous disclosure contraventions. See the Spotlight above for full details.

Civil Judgments

The Federal Court and the Full Federal Court handed down judgment in two cases:

• The Federal Court found that former Youpla Group CEO Bryn Jones and director Ronald Pattenden breached their directors’ duties. The case concerned funeral funds marketed predominantly to Indigenous Australians, and insurance arrangements that put substantial sums, the companies’ viability and members’ benefits at risk. The decision is another significant chapter in the collapse of a business that caused serious harm in Indigenous communities, and a sobering reminder of what is at stake when directors fail to protect the interests of members who depend on the product.
• The Full Federal Court dismissed an appeal by Reginald Lance Williams, a former registered company auditor, upholding the earlier decision that his registration as a company auditor remain cancelled. Justice Perry had previously dismissed Mr Williams’ challenge to the 2018 decision of the Companies Auditors Disciplinary Board (CADB) to cancel his registration, and the Full Court affirmed that no legal or jurisdictional error occurred in the CADB’s decision. The disciplinary proceedings arose from Mr Williams’ audit of the LM Managed Performance Fund for the year ended 30 June 2012, where the CADB found that he failed to adequately perform his duties as an auditor. With the final appeal decided eight years after the CADB’s decision, the outcome shows both the durability of auditor disciplinary decisions and how long they can take to resolve.

Other Civil Actions

ASIC is seeking leave to appeal in one matter:

• ASIC is seeking leave to appeal the finding that three former Rex non-executive directors – John Sharp, Siddharth Khotkar and Lincoln Pan – did not breach their directors’ duties in connection with Rex’s February 2023 profit forecast. Although the Court found that Rex breached its continuous disclosure obligations, it rejected the case against the three directors. The appeal could help clarify what boards, and non-executive directors in particular, must do when a listed company publishes an optimistic forecast that later unravels. See further detail in the Spotlight above.

Criminal Action

Criminal Charges

Three individuals were charged with criminal offences:

• Ali Youssef, a director of Allscope Concrete & Pumping Pty Ltd (Allscope), was charged with one count of dishonestly using his position as a company director to gain an advantage, contrary to the Corporations Act 2001 (Cth), and two counts of dealing with the proceeds of crime, contrary to the Criminal Code (Cth). ASIC alleges that on 4 December 2024, Mr Youssef transferred $69,000 from Allscope’s bank account to his personal account, after being told that Allscope was to be wound up and that he could not deal with its assets, including by transferring funds. The charges show the risk of treating a company’s bank account as a personal one, particularly once a winding up is underway or likely to occur.
• Ezzat-Daniel Nesseim, a former financial adviser, was charged with seven offences for allegedly breaching permanent banning orders made against him by ASIC under the Corporations Act 2001 (Cth). ASIC alleges that Mr Nesseim performed functions involved in carrying on a financial services business in relation to three businesses and provided personal financial product advice to four consumers. As with Kristian Convery, who was sentenced in September for acting as an SMSF auditor while disqualified, the case is a reminder that an ASIC ban is not merely administrative; acting in breach of one can lead to criminal charges.
• Brian Jacques Creigh was charged with one count of carrying on a financial services business without a licence, contrary to the Corporations Act 2001 (Cth), and one count of dealing in the proceeds of crime worth $1 million, contrary to the Criminal Code (Cth). ASIC alleges that between April 2021 and June 2022, Mr Creigh, through Panacea Capital Pty Ltd, offered a digital asset-based investment product known as the ‘Panacea Capital Cryptocurrency Investment Fund’, when neither he nor Panacea Capital held a licence or was an authorised representative. Mr Creigh was charged in the Melbourne Magistrates’ Court on 19 October 2026. The case reflects ASIC’s consistent position that offering an investment product in digital-asset form does not displace the need for a licence.

Convictions

One company was convicted of a criminal offence:

• Palmer Leisure Coolum Pty Ltd was convicted and fined $10,000 for announcing a proposed takeover of The President’s Club Ltd and then failing to make the offers within the required two-month period. The breach dates back to 2012 and carried a maximum penalty of $55,000. The company had earlier pleaded guilty to takeover-law offences, as reported in our June Enforcement Wrap. That the matter has reached conviction some 14 years after the breach is itself notable, and the takeaway is simple: publicly announcing a takeover bid creates enforceable obligations, not merely market theatre.

Administrative Action

Bans

One individual was banned by ASIC from providing financial services:

• ASIC banned Pardeep Singh, a former financial adviser at MWL Financial Services Pty Ltd (MWL), from providing financial services for four years, effective 18 May 2026.

Licence Suspension or Cancellation

Three licensees had their Australian financial services licence (AFSL) or Australian credit licence (ACL) cancelled:

• ASIC cancelled the ACL of MWL Financial Services Pty Ltd (in liquidation) (ACN 095 907 574), effective 12 October 2026. On 28 November 2025, the Australian Financial Complaints Authority (AFCA) made a determination against MWL, which MWL failed to pay. On 16 September 2026, the Compensation Scheme of Last Resort (CSLR) paid $90,031.34, including interest, to satisfy the AFCA determination. As a result, ASIC cancelled MWL’s credit licence.
• ASIC cancelled the AFSL of Kyle Clifford Frost, a NSW financial adviser, effective 15 October 2026. ASIC found that Mr Frost failed to comply with a number of obligations imposed on licensees under the Corporations Act 2001 (Cth).
• ASIC cancelled the ACL of Walker Stores Pty Ltd (in liquidation), effective 12 October 2026. On 30 June 2026, AFCA made two determinations against Walker Stores, which it failed to pay. On 23 September 2026, the CSLR paid $4,106 and $18,310 to the respective complainants to satisfy the AFCA determinations. As a result, ASIC cancelled Walker Stores’ credit licence. Read together with MWL, the message is clear: when a licensee leaves an AFCA determination unpaid and the CSLR steps in, loss of the licence follows.

Financial Services and Credit Panel (FSCP)

The FSCP cancelled the registration of one individual:

• Evan James Byrnes had his registration cancelled by the FSCP, effective 23 October 2026, for two and a half years until 23 April 2029. The prohibition prevents Mr Byrnes from being registered with ASIC as a relevant provider of personal advice to retail clients in relation to relevant financial products. The Panel found that Mr Byrnes failed to comply with the Code of Ethics by failing to maintain adequate records of client reviews and by charging ongoing financial advice fees despite not providing services for those fees.

Infringement Notices

ASIC issued infringement notices to 21 companies within one corporate group:

• Twenty-one companies within the Visy and Pratt group were each issued a $198,000 infringement notice for allegedly failing to lodge their financial reports for the year ended 30 June 2025 on time, by 31 October 2025. The notices total $4.158 million. Payment of an infringement notice is not an admission of guilt or liability. Coming on the heels of the $594,000 issued to three Mainfreight companies in August, the action sends a clear message that ASIC is actively enforcing financial reporting requirements for public and large proprietary companies.

Interim Stop Orders

ASIC made interim stop orders in three matters, all involving mortgage or credit-focused funds, suggest ASIC is watching this corner of the market closely:

• ASIC temporarily stopped offers in the $573.2 million Murdoch Clarke Mortgage Fund, citing concerns about disclosure of related-party transactions, fees, risks and withdrawal arrangements in the fund’s product disclosure statement (PDS). The order was revoked on 2 November 2026 after the manager revised its PDS. The episode sends a clear warning to private credit funds: vague or incomplete disclosure can bring fundraising to an immediate halt.
• ASIC made an interim stop order on the PDS issued by Australian Secure Capital Fund Limited (ASCF), which offers units in three registered managed investment schemes: the ASCF Premium Capital Fund, ASCF Select Income Fund and ASCF High Yield Fund (the Funds). The order prevented ASCF from offering, issuing, selling or transferring interests in the Funds. ASIC was concerned that the PDS was defective because it failed to disclose certain information about the Funds, may contain a misleading and deceptive statement, and was not presented in a clear, concise and effective manner.  After amendments were made to the PDS the stop order was revoked on 19 October 2026.
• ASIC issued an interim stop order against Fidante Partners Limited (Fidante) under the design and distribution obligations, preventing it from issuing Class A units in the Ares Global Credit Income Fund. ASIC was concerned that the target market determination was not appropriate because Fidante has not met its design and distribution obligations, and that if the product were issued to a client in the target market, it would be unlikely to be consistent with the objectives and financial situation of that client. After Fidante updated the TMD - removing capital preservation claims, lowering allocation limits to 10–25%, adjusting the risk rating to high, and clarifying redemption terms – ASIC revoked the order on 21 October 2026. Auditor Actions

ASIC accepted one application to cancel an auditor’s registration:

• ASIC accepted the application of Benjamin Alfred Peters to cancel his registration as a company auditor. ASIC’s audit surveillance program found significant concerns about the quality of an audit he led through L Audit Pty Ltd. As a result, both Mr Peters’ company auditor registration and L Audit Pty Ltd’s authorised audit company registration have been cancelled. The outcome is a concrete illustration of the audit quality concerns ASIC separately flagged this month (see below).

Liquidator Registration

ASIC cancelled the registered liquidator status of one individual:

• ASIC cancelled the liquidator registration of James Gerard Thackray on 2 October 2026. Mr Thackray failed to pay Industry Funding Model (IFM) levies and their associated late payment penalties for at least 12 months after their due date and, between January 2023 and September 2026, failed to respond to ASIC about the unpaid amounts. On 17 September 2026, in response to ASIC’s Notice of Intention to Suspend or Cancel Registration, he made submissions and paid all outstanding IFM levies. Paying the levies only once the notice of intention arrived did not prevent cancellation.

Other Enforcement Actions and Regulatory Developments:

• Prediction markets get a regulatory reality check. Betting on elections, economic events and other real-world outcomes may be booming overseas, but ASIC is not yet persuaded that retail prediction markets serve the public interest in Australia. The message is deliberately cautious: innovation alone will not outweigh concerns about consumer harm, market integrity and whether these products belong in the retail market at all.
• ASIC wants market operators financially ready for disruption. Market resilience costs money, and ASIC wants operators to prove they have enough of it. Proposed updates to Regulatory Guide 172 would sharpen expectations around available financial resources, stress testing, monitoring and reporting. The consultation closes at 5 pm AEDT on 4 December 2026.
• ASIC tells auditors: the basics still are not good enough. ASIC says financial reporting and audit quality continues to fall short, particularly where revenue recognition, impairment and asset valuations depend heavily on professional judgment. Its surveillance identified auditors failing to challenge management assumptions, obtain sufficient evidence or properly document their conclusions. The scale is notable: 353 financial reports were reviewed, and 42 findings were raised across company audit surveillances. The common thread is scepticism – where judgment is heaviest, challenge needs to be strongest.
• Liquidations deliver grim returns for ordinary creditors. ASIC’s review of almost 30,000 liquidations exposes how little is often left when companies collapse. Half of finalised liquidations recovered no more than 1% of reported liabilities, and only 5.3% paid a dividend to ordinary unsecured creditors. Where a dividend was paid, the median return was just 9.8 cents in the dollar. Many liquidations begin with too few assets to fund meaningful investigations or creditor recoveries, so for ordinary creditors the practical lesson is to manage credit exposure before insolvency, because recovery afterwards is the exception.

Across October’s outcomes runs a common thread: what the people in charge knew, and what they did with it. Rex’s chief executive held the numbers while optimistic guidance stayed in the market; fund managers saw offers halted where disclosure fell short; and ASIC’s auditor surveillance found judgment-heavy areas where challenge was missing. For boards, licensees and gatekeepers, the question is not only whether the right information is reaching decision-makers, but whether it is changing what they say and do.

If any of the above is relevant to you or you want to know more, please feel free to get in touch.

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The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.

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