ASIC bans former Magnolia Group Capital director from providing financial services

ASIC bans former Magnolia Group Capital director from providing financial services

The Australian Securities and Investments Commission (ASIC) has disqualified former Magnolia Capital Group director Mitchell Atkins from managing corporations for a period of 5 years and banned him for a period of 10 years from providing financial services and engaging in credit activities.

The Magnolia Capital Group of companies collapsed in 2022 owing unsecured creditors millions of dollars. The Group operated businesses between 2018 and 2022 that provided investors with financial advice and services in relation to secured lending transactions and share investment.

Mr Atkins was a director of all the companies in the Magnolia Capital Group, including 13 companies where a liquidator’s report was lodged with ASIC and identified that the companies were unable to pay their unsecured creditors more than 50 cents in the dollar.

From 19 September 2018 to 7 October 2022, Mr Atkins was an authorised representative of Australian financial services licensee Guildfords Fund Management Pty Ltd.

ASIC’s findings included that Mr Atkins:

  • failed to act in good faith as a director by putting investor funds at risk, showed a lack of honesty and integrity by creating false documents, co-mingling investor funds and displayed a lack of competence, professionalism and financial management such that it is in the public interest that he be disqualified from managing corporations;
  • is not a fit and proper person to provide financial services due to him dealing in financial products without authorisation from Guildfords, making misleading and deceptive representations to investors about their investments and dishonestly retaining investor funds which were due to be repaid to investors; and
  • is not a fit and proper person to engage in credit activities, including because he failed to undertake training, deal with investor complaints and to respond to requests from Guildfords.

The liquidators of the Magnolia Capital group of companies have reported a deficiency to creditors of between $40-50 million.

On 2 March 2023, Mr Atkins was declared bankrupt. In June 2023, ASIC obtained an order from the Federal Court of Australia to restrict Mr Atkins from leaving Australia for a period of six months.