Introduction: ASIC five Dover case studies

Soon after the Hayne Royal Commission was announced ASIC forwarded a discussion paper on Dover to the Royal Commission staff. This December 2016 discussion paper is reproduced in full below. It’s a very scary read. As you can read, ASIC’s discussion paper is essentially a collection of five case studies making Terry McMaster sound like the greatest rogue ever. Someone who had to be stopped no matter what as soon as possible. These five case studies are:

Case study 1 Dover’s new adviser appointment processes

Case study 2 Dover’s statement of advice review processes

Case study 3 The advice of Terry McMaster

Case study 4 The advice of Florence Tee

Case study 5 Dover’s termination of adviser appointment processes.

Each of ASIC’s five case studies is faked

Each of ASIC’s five case studies was faked. ASIC’s executives and lawyers did this to create a false narrative on each of Dover and Terry McMaster. This false narrative went so far as ASIC’s Financial Advice (FA) and Financial Services Enforcement (FSE) groups saying Dover should be shut down using heavy weight Federal Court injunctions against Terry McMaster. More particularly, they wrote:

“Given the nature of the findings identified by FA, FA sought early engagement with FSE to assist in the development of a strategy to progress ASIC’s work on this licensee. Joint meetings were conducted between FA and FSE over the December/January period. The purpose of these meetings was to discuss the potential options going forward in relation to the AFS Licence. Specifically, FA was interested in exploring alternative approaches to a negotiated outcome (which has been unsuccessful with this Licensee in the past and does not appear to be an effective regulatory outcome given the findings) and an administrative outcome which has also proved to have challenges and limitations in similar licensee matters in the past.”

The phrase “exploring alternative approaches to a negotiated outcome” is ASIC-speak for closing Dover.

“Following engagements with FSE we would seek to consider action against McMaster under s1101B, specifically pursuing an order that McMaster is prohibited from providing financial services and prohibited from being involved in the provision of financial services so that he can no longer operate Dover. Due to the level of operational control exercised by McMaster in relation to Dover, there is no possibility of any change within the compliance framework of Dover without his removal. Depending on the timeframes, this may also require injunctive action against McMaster under s1324.5.2.

In regards to actions against the Dover AFSL there has been discussions regarding a number of potential actions to be taken. Administrative action via a delegate has been considered, however this approach has been difficult in the past in achieving suitable outcomes. Court based action to cancel or suspend the license is another consideration.”

You can read these statements in their original context here: ASIC document dated 29 March 2017 recording ASIC’s decision to close Dover. This is heavy stuff: ASIC actually wanted to use Federal Court injunctions to close Dover in 2016, based in its five faked case studies. In particular, ASIC wanted take out injunctions against Terry McMaster under section 1101B and section 1324 of the Corporations Act to prevent him from providing financial services and to close Dover. This is unprecedented: at time these injunctions had never been used against an individual.

Yes, ASIC faked its case studies

ASIC’s Financial Advice investigators falsified the case studies used to create this narrative. These falsified case studies were provided to the Hayne Royal Commission. Examples of how ASIC did this are set out at:

Friday Reflection explaining how ASIC staff faked the evidence in Example 3 The advice of Terry McMaster

Friday Reflection explaining how ASIC staff faked the evidence in Example 4 The advice of Florence Tee.

What laws did ASIC break?

ASIC broke numerous laws. It is obviously illegal for ASIC to create false case studies to damage Terry McMaster and Dover Financial Advisers, let alone provide them to a Royal Commission and use them to intimidate and threaten individuals through the media and otherwise. And for ASIC to then force Dover to close and then publicly present claim it had nothing to do with ASIC, as detailed in earlier Friday Reflections, is plainly disgraceful.

In fact ASIC broke so many laws it is impossible to list them all here.  One such law is section 6H  of the Royal Commission Act. It imposes a two year gaol sentence if false or misleading evidence is provided to the Royal Commission.

Obviously behaviour like this also breaches the Public Service Act and the related behavioural guidelines.

As you can read below, this is a  serious matter. If faking evidence provided to a Royal Commission does not merit termination of employment, what does?

What has ASIC done about this?

Dover has repeatedly brought these matters to ASIC’s attention. For example, you can read Dover’s letter of complaint dated 27 April 2019 addressed to ASIC’s Chairman, Mr James Shipton, here: Dover’s letter of complaint dated 27 April 2019.

So far nothing has happened: as far as Dover can tell ASIC is virtually ignoring the matter. Dover has requested numerous meetings and all requests have been declined.