22-013MR ASIC banning and disqualification of former Provident Capital director upheld by AAT

The Administrative Appeals Tribunal (AAT) has upheld ASIC’s 2015 decisions in relation to former Provident Capital Limited director Mr Michael Roger O’Sullivan, of Mosman, Sydney, to ban him from providing financial services for seven years and to disqualify him from managing corporations.

The AAT, which handed down its decision on 27 January 2022, reduced the period of Mr O’Sullivan’s disqualification from managing corporations from five years to two years and nine months, which will be in place until 20 September 2024. The seven-year ban on him providing financial services will be in place until 16 February 2022.

The AAT’s decision follows a series of Court and AAT hearings arising from appeals lodged by Mr O’Sullivan following ASIC’s banning and disqualification decisions in February 2015 (15-033MR).

In reviewing ASIC’s findings regarding Mr O’Sullivan on remittal of the hearing by the Federal Court (18-078MR), the Tribunal found Mr O’Sullivan:

failed to exercise due care and diligence in relation to the management of the largest loan (the Burleigh Views Loan) made by Provident Capital Limited (PCL), by deciding to accrue interest on that loan as earned and recoverable income rather than characterising that loan as being in arrears;
made inadequate disclosures or misleading statements in a prospectus and information booklets regarding debentures issued by PCL;
made inadequate disclosures or misleading statements regarding the Burleigh Views Loan in reports to the debenture trustee, Australian Executor Trustees Limited (AETL);
was involved in PCL making inadequate disclosures or misleading statements to AETL about the status of the Burleigh View Loan, the status of the development approval, the valuation information about the property, and the risk of a debt shortfall on any realisation of the property;
failed to exercise due care and diligence and used his position improperly to gain advantages for himself in securing the release of a personal guarantee he had provided for a loan from PCL to a related company, Cashflow Finance Solution, of which he was a director.

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