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ASIC obtains federal court order banning derivatives trading director


Action by the Australian Securities and Investments Commission has resulted in Neil William King, formerly of Brighton, Victoria, being removed from the financial services industry for six years.

In proceedings brought by ASIC against Camelot Derivatives Pty Ltd (in liquidation) (Camelot) and Mr King, the Federal Court today found that:

Camelot was established as a trading vehicle for Mr King;

King and Camelot made representations to the public, including at investment seminars, about high returns earned by Camelot clients trading in options;

in fact, between January 2008 and December 2009, 50 Camelot clients lost over AUD2.47 million while paying commissions of over AUD2.45 million; and

in 2010 sixteen Camelot clients lost AUD982,432 while paying commissions over AUD1.03 million.

Based on these findings, the court made orders:

that Camelot had engaged in options trading when it knew, or ought reasonably to have known, that it was furthering its interests in earning commissions and not acting in the interests of its clients;

that Mr King had caused Camelot to make misleading or deceptive statements, including about profits earned by Camelot clients, in contravention of the Corporations Act and Australian Securities and Investments Commission Act ;

that Camelot had failed to do all things necessary to ensure the financial services it provided were provided efficiently, honestly and fairly in contravention of the Corporations Act;

that Mr King had aided and abetted, and was knowingly concerned in, the contraventions by Camelot; and

restraining King from providing any financial services for a period of six years.

King consented to these orders.

The court also extended the asset preservation orders against King until 30 June 2012 to allow former Camelot clients time to consider taking legal action in response to the declarations and orders in today’s proceedings. The court also ordered that the asset preservation orders be varied to allow a payment of AUD375,000 to Camelot by another company controlled by King namely, Camelot Capital Pty Limited.

These orders otherwise conclude ASIC’s proceedings against King and Camelot.

Camelot was a Melbourne-based derivatives dealing company specialising in the trading of international index options.

Camelot promoted itself through website, publications and seminars as a specialised derivatives dealer that allowed investors to participate in the lucrative options trading marketplace with minimum effort and in the knowledge that a professional option trader was assisting them to manage all aspects of their trading. Camelot claimed that by using its time-tested risk management method, superior returns could be earned in a high risk market.

Section 912A(1)(a) of the Corporations Act requires that a holder of an Australian financial services (AFS) licence do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly.

Camelot’s AFS licence was cancelled in July 2011 following Camelot going into voluntary liquidation in April 2011.

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