ASIC bans ex-Linchpin Capital boss Peter Daly for five years

Peter Daly, the colourful former chief executive of collapsed financial services group Linchpin Capital, and two fellow directors have been banned from providing financial services for five years.

The Australian Securities and Investments Commission imposed the ban on Mr Daly and former Linchpin and Endeavour Securities directors Ian Williams and Paul Raftery for failing to act in the best interests of investors in managed investment schemes under their control.

"Mr Williams, Mr Daly and Mr Raftery did not understand the importance of the duties of directors to protect members of the managed investment schemes and, as a result, their conduct put significant amounts of other people’s money at risk," an ASIC statement said.

The Administrative Appeals Tribunal threw out applications for stay and confidentiality orders by the three men on Wednesday, allowing ASIC to publicly announce the banning orders it handed down in November 2019.

The bans end a saga kicked off in July 2018, when ASIC sued Linchpin for operating the scheme known as the Investport Income Opportunity Fund (IIOF) without a licence and for the directors using investors' money for personal use without permission or disclosure.

Subsequent court hearings heard that Mr Daly had taken a $125,000 loan from the fund to pay for his daughter's wedding – a charge he has repeatedly denied.

It also heard that Mr Raftery was lent $30,000 to settle a tricky divorce with his former solicitor wife, while financial advisers linked to Linchpin borrowed a collective $6.3 million to fuel business growth.

IIOF is one of several Linchpin entities liquidated by Deloitte in June 2019. It is understood the fund had about $20 million in assets and that several retail investors became creditors in the collapse.

Prominent figure

Mr Daly was a prominent figure in the financial planning industry, as the former chief executive of Linchpin subsidiary Beacon Group and before that the Australian Financial Services (AFS) Group, which was investigated by ASIC in 2011 and went into administration in 2013, leaving more than 200 financial advisers without a licence.

He also did a stint at Mark Bouris' Yellow Brick Road, recruited to lead an ill-fated project to lure financial planning practices from the networks owned by the big four banks and AMP.

A former chairman of the Association of Independently Owned Financial Professionals, Mr Daly was a vocal opponent of the big banks' wealth management business model of vertical integration.

But an ASIC affidavit filed in the Federal Court in Queensland in 2018 alleged that Linchpin's business model involved financial advisers licensed by its subsidiaries promoting the company's in-house investment funds.

In a communication to staff and stakeholders of Beacon sent on Thursday, obtained by The Australian Financial Review, Mr Daly foreshadowed the announcement of the ban.

"I have been fighting a protracted exchange with ASIC and anticipate they will announce within the next 24 hours," he wrote.

"The past two years have represented a harrowing journey and I should like to acknowledge the tremendous level of loyalty we have received from our advisers, mortgage brokers, staff, preferred partners, friends and family.

"It was that strength and overwhelming messages of support that saw us through the darkest hours."

He also heralded the successful completion of the sale of Beacon to US private equity investor Genesis Financial Inc.

"I am delighted to advise that earlier this afternoon I received an email from ... Genesis confirming they had exchanged a US $3.5 million convertible note and are awaiting on disbursements, following which settlement will be finalised," he wrote.

The OTC Markets-listed, New York-headquartered firm names just three assets in its investment portfolio, including Linchpin related entity The Financial Link Group.

Shortly before ASIC sought court orders against Linchpin in 2018, the company announced plans to list on the Australian Securities Exchange and merge with fund manager AD Capital. The merger did not proceed.