AFCA require Amalgamated Australian Investment Services Pty Limited to pay client $112,500

AFCA recently required Amalgamated Australian Investment Services Pty Limited to pay a former client $112,500 in compensation for advice to invest into a company that was to be listed on the ASX by the end of 2020. The advisor represented to the client that the investment was “safe” and all capital would be returned plus an increase in value upon listing.

AFCA recently required Amalgamated Australian Investment Services Pty Limited to pay a former client $112,500 in compensation for advice to invest into a company that was to be listed on the ASX by the end of 2020.  The advisor represented to the client that the investment was “safe” and all capital would be returned plus an increase in value upon listing.

 

Ultimately the “safe” investments did not list on the ASX as represented by the advisor and the client lost their investment.  AFCA held that there was no reasonable basis for the advisor to make the representations that:

  1. The minimum investment was $150,000.  The Investment Memorandum did not state this
  2. The investment was “safe.  Contrary to this representation the shares were  high risk and speculative contrary to Mr H’s safe investment representation
  3. The clients capital would be returned plus an increase an investment.  There was significant uncertainty that this would occur and AFCA found this induced the client to make the investment.

 

Whilst AFCA held that the client was aware the investment was high risk, ultimately the advisor was responsible for the loss.

 

Bad Share Advice Leads to Compensation Payments

 

FD Legal are assisting numerous clients who have been misled by their financial advisor into making investments into unlisted companies with the promise that the company would list on the ASX after being told the investment was “safe”.  Companies which are not listed on the ASX are often illiquid investments and can present difficulties to the investor to sell.  If you have received misleading advice from a financial advisor around shares being listed on the ASX or IPO offers we encourage you to contact FD Legal to discuss whether you have a claim. We are committed to ensuring clients receive the best possible advice and guidance on their situation, especially in SMSF advice cases.  You can contact us online, call us on 1800 433 533 or email us at enquiry@fdlegal.com.au

 

https://service02.afca.org.au/CaseFiles/FOSSIC/964976.pdf

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