Short-seller’s ASIC links in focus in Mayfair case

Sources close to former ASIC figures said the regulator’s leaders were uncomfortable with Mr Hempton conducting training sessions from the regulator’s Sydney offices.

Accurate

Clarification

No wonder! They clearly had their heads screwed on whereas at least one other in a senior leadership role at ASIC didn't!

An ASIC spokesman said Mr Hempton “offered to conduct training for ASIC staff and that offer was referred by Deputy Chair Chester to the appropriate ASIC executive”.

Even more incredible that Ms Chester was the one who invited him in!

But Mr Hempton has also helped ASIC, as a confidant in the regulator’s market surveillance activities and running training sessions for staff on three occasions.

This is the equivalent of Mother-hen allowing the fox into the Hen House. ASIC staff being trained by a short-seller whom they license and who profits from their actions is inexcusable. An investigation is needed into these decision

Mr Hempton told The Australian he had sent a large number of WhatsApp messages to Ms Chester over the year, but more recently she had stopped responding to him.

Why is the Deputy Commissioner of ASIC keeping the company of a short-seller? Mr Hempton is conflicted, he profits from corporate failure, has a track record of bad judgment calls, and Ms Chester had no business communicating with him in relation to market participants. It is incredible that this has occurred. It warrants a full investigation!

took up the issue despite enforcement falling under the purview of the office of enforcement.

Dan Crennan was in charge of enforcement, so why did Karen Chester direct enforcement against Mayfair? This needs to be investigated, preferably at a Parliamentary inquiry. Mayfair's clients deserve answers!

The six-month turnaround from reports to action raised eyebrows within the ASIC executive after Ms Chester, who joined the regulator in December 2018 after missing out on the top job at the Productivity Commission

Several former ASIC figures have confirmed to The Australian they were concerned over the speed with which the Mayfair investigation was expected to be carried out.

Karen Chester needs to explain why ASIC acted so quickly given she was in charge of the action against Mayfair. Mayfair maintains that there was not a proper basis for the actions in the first place.

Vasco Trustees’ managing director warning Mr Mawhinney he had been told to “attend a meeting with about six people from ASIC today to discuss IPO Wealth and Mayfair”.

Mayfair was never informed of what occurred or what was agreed at the meeting. It is telling that ASIC did not act against Vasco, yet Vasco was responsible for structuring and overseeing the IPO Wealth Fund.Less

Documents show four hours later ASIC’s then head of investment managers, Rhys Bollen, responded to the senior manager, telling them he was “thinking of something like WARNING - MAYFAIR 101”

This shows the speed at which ASIC acted in the absence of any investigation whatsoever. They were able to prepare a notice but weren't able to write, telephone or visit Mayfair expressing their concerns. This is where ASIC's processes failed Mayfair and our clients.

“My parents in law - 80 years old in Mildura - were going to put some money with them. This seems far less sensible to me,” he wrote.

Mayfair 101's internal records do not show anyone going to Mildura or dealing with any prospective clients in Mildura.

Mayfair views Mr Hempton as the key instigator of ASIC’s action, while the regulator has rubbished this, claiming it was looking into the group well before Mr Hempton’s involvement.

If this was the case, why did they not contact Mayfair 101? Why have they not interviewed Mr Mawhinney?

But the speed with which ASIC moved, with ASIC moving the morning after Ms Chester was contacted by Mr Hempton, may haunt the regulator in the rerun of its case with Mr Mawhinney

ASIC insists it was already keeping a close watch on Mayfair, with tip-offs from concerned market watchers before Mr Hempton added a warning about the firm in an email to Ms Chester

Misleading

Defamatory

If this is true, the 'market watchers' were not Mayfair's clients. They were competitors and/or people that did not understand Mayfair's business. This has proven to be the case as time has passed. Many so-called industry 'experts', including various journalists at the Australian Financial Review, considered Mayfair 101 to be a fund manager when it did not manage people's money in exchange for payment. ASIC ought to have been able to discern between competition pressure and genuine harm, of which there was none to Mayfair's clients until ASIC got involved.

This was an unnecessary taunt made by Mr Hempton on Twitter to his 50,000+ followers. Considering the cases were civil and not criminal, Mr Hempton's comments were highly defamatory.

Mr Hempton, who runs asset manager Bronte Capital from its office in Sydney’s Eastern Suburbs, has taken credit for tipping off ASIC about Mayfair

Mr Hempton posted on Twitter that he reported Mayfair 101 to ASIC

A close friendship between Bronte Capital short-seller John Hempton and ASIC deputy chair Karen Chester

Mr Hempton and Ms Chester worked together at Australian Treasury a few decades ago. Mayfair 101 understands they exchanged a large volume of text messages via an encrypted chat service during the time Ms Chester was Deputy Commission at ASIC.

Short-seller John Hempton’s ASIC links in focus in Mayfair 101 court case

Mr Hempton isn't currently the subject to Mayfair 101 litigation, however this article has correctly identified the fact that his actions prompted Karen Chester, ASIC's deputy commissioner and other senior ASIC staff, to act on his self-professed speculative views.