The Federal Court in Melbourne has today made orders winding up Ostrava Equities Pty Ltd and eight other companies associated with the Ostrava financial services business and its proprietors Mr Bradley Grimm and Ms Vanessa Ash.

The Court has also ordered that Mr Grimm and Ms Ash be restrained from providing financial services, for 20 and 10 years respectively, and disqualified from managing corporations, for 15 and 7 years respectively.

Following a successful application by ASIC, Ms Leanne Chesser and Mr Craig Shepard of KordaMentha were appointed as joint and several liquidators of Ostrava Equities Pty Ltd, Ostrava Asset Management Pty Ltd, Ostrava Securities Pty Ltd, Ostrava Wealth Management Pty Ltd, Beta Pharmacology Pty Ltd, Prometheus Capital Pty Ltd, Thrive Lending Pty Ltd, Trade BTC Pty Ltd and Equity Capital Partners Hedge Fund Pty Ltd (the Companies).

Justice Davies made the winding up orders on just and equitable grounds, having regard to serious misconduct and mismanagement of the Companies' affairs, including multiple breaches of financial services laws by the Companies and by Mr Grimm in his capacity as financial adviser to self-managed superannuation fund (SMSF) clients.

The Court found that Ostrava Equities Pty Ltd and Mr Grimm engaged in dishonest conduct by charging unauthorised fees to clients. The Court also found that the company and Mr Grimm contravened the Corporations Act by making misleading statements to clients about the value of their SMSFs, providing unlicensed managed discretionary account services, failing to comply with financial services disclosure obligations and failing to act in clients' best interests.

The Court found that both Mr Grimm and Ms Ash, who is a lawyer and former employee of ASIC, had breached their duties as company directors.

Justice Davies found that Mr Grimm's conduct was "deliberate and in contumelious disregard of the law and statutory requirements".  Her Honour said that Mr Grimm had "engaged in deliberate courses of conduct to enrich himself and the corporate group that he established at others' expense".

Justice Davies further found that Ms Ash "either knew, or ought to have known, the standard of conduct required by law but she appears to have relied passively on Mr Grimm in the carrying on of the financial services business without proper supervision or exercising any independent or critical judgment". 

ASIC Commissioner Greg Tanzer said, "This outcome sends a message that anyone who breaches financial services laws or their duties as company directors faces serious consequences. ASIC will not tolerate this kind of egregious misconduct."

Background

ASIC commenced legal action in April 2015 (refer: 15-106MR) against Mr Grimm, Ms Ash and Ostrava Equities Pty Ltd, Ostrava Asset Management Pty Ltd and Ostrava Securities Pty Ltd.

On 24 August 2015 ASIC was given leave to join Ostrava Wealth Management Pty Ltd, Beta Pharmacology Pty Ltd, Prometheus Capital Pty Ltd, Thrive Lending Pty Ltd and Trade BTC Pty Ltd as defendants to the proceeding. On ASIC's application, the Court appointed Ms Chesser and Mr Shepard as provisional liquidators to these and the other corporate defendants on 20 October 2015 (refer: 15-308MR).

On 1 April 2016, ASIC was given leave to join Equity Capital Partners Hedge Fund Pty Ltd as a defendant to the proceeding.

Ms Ash was the sole director of Ostrava Equities Pty Ltd and a joint director of Ostrava Asset Management Pty Ltd and Ostrava Securities Pty Ltd.  Ms Ash was previously employed by ASIC as a lawyer between 2000 and 2009.

Mr Grimm was a director of Ostrava Wealth Management Pty Ltd, a joint director of Ostrava Asset Management Pty Ltd and former director of Ostrava Equities Pty Ltd. He was the sole director of Beta Pharmacology Pty Ltd, Prometheus Capital Pty Ltd, Thrive Lending Pty Ltd, Trade BTC Pty Ltd and Equity Capital Partners Hedge Fund Pty Ltd.

Ostrava Equities Pty Ltd and Mr Grimm were until 21 October 2015 authorised representatives of Australian financial services licensee Marigold Falconer International Ltd.  Mr Grimm and Ms Ash are also authorised representatives of Ostrava Securities Pty Ltd which holds its own Australian financial services licence.

Mr Grimm and Ms Ash agreed to the winding up, restraint and disqualification orders at a hearing on 21 June 2016. 

A copy of Justice Davies' judgment delivered on 1 September 2016 is attached here.

The orders can be viewed here.