The local regulator, the Australian Securities & Investments Commission (Asic), had been seeking financial penalties and banning orders against LMIM’s founder Peter Drake and its former directors, Francene Mulder and Eghard van der Hoven, after the fund collapsed owing millions of dollars to investors worldwide.
However, a ruling by the Australian Federal Court on 28 December found the three did not breach their duties as directors of LMIM. In September, Asic dropped a similar action against two other directors of the fund, Simon Tickner and Lisa Darcy.
Real estate failure
Asic alleged that Drake had used his position at LMIM to gain an advantage for himself, and that the other former directors had breached their duties by failing to act with proper care and diligence regarding transactions involving the A$400m (£233m, $288m) LM Managed Performance fund (MPF).
The MPF loaned funds to Maddison Estate Pty Ltd, to complete a property development on the Gold Coast known as ‘Maddison Estate’. Asic’s case focused on a decision of the directors to extend the loan in 2012.
"LMIM was responsible for managing at least A$800 million on behalf of approximately 12,000 investors in Australia and overseas."
Maddison Estate was the development company behind what was once touted as a A$1bn real estate development in the northern suburbs of the Gold Coast on the Queensland coast near the state capital of Brisbane
The regulator has said it would review the court’s latest decision but currently has no other active legal action pending against directors of the firm, having begun the case against the directors in 2014.
In total, LMIM was responsible for managing at least A$800m on behalf of approximately 12,000 investors in Australia and overseas.
The fallout from the collapse of LMIM in 2013 has been truly worldwide affecting many expat investors, particularly in Thailand, the UK and the Middle East.
One investor action group, the LM Investor Victim Centre (LMIVC), said in July last year it was working with Greg Fairley of Capital Interchange and London Law firm Harcus Sinclair to examine opportunities to bring actions against LMIM in England and Wales, as well as other jurisdictions.