The Supreme Court decision came a year after former executives Michael King, Craig White, David Anderson, Guy Hutchings and Marilyn Watts were found to have committed 217 contraventions of the Corporations Act, reports local newspaper the Courier Mail.
The breaches related to their involvement in the misappropriation of A$147.5m of funds that had been held by a managed investment scheme known as the Premium Income Fund (PIF) on behalf of unitholders.
The funds were used to pay debts owed to other related entities in the MFS Group, which collapsed in 2008 owing A$2.5bn.
The court last year found the officers acted dishonestly in carrying out their duties in managing MFS Investment Management, the responsible entity of the PIF.
Judgment day
On Friday, Supreme Court justice James Douglas imposed penalties ranging from A$90,000 to A$650,000 on the five individuals.
He also ordered King, White, Anderson and Hutchings to each pay compensation ranging from A$28.7m to A$205.7m to PIF.
The fines will also be used to pay the majority of the Australian Securities and Investment Commission’s (Asic) costs in pursuing MFS and its directors. The Australian regulator launched its civil penalty proceedings in 2009.
White, a former chief executive, was permanently disqualified from managing corporations.
King, who co-founded MFS and served as chief executive until January 2008, faces a 20-year ban.
Both Anderson, who was chief financial officer and company secretary, and Hutchings, ex-chief executive and director of MFS Investment Management, were banned for 25 years.
No disqualification was handed to Watts, who was a fund manager of the PIF.
Attitude beggars belief
In court on Friday, Douglas endorsed Asic’s view that legal requirements “were flagrantly ignored” and that the penalties “should reflect the complete disregard which these defendants had to their duties under the Corporations Act”.
“(Asic’s) submissions were justified. The insouciant attitude of the defendants to this misuse of money intended to be used for PIF’s investors beggars belief,” Douglas said.
Asic commissioner John Price said the penalties reflected ‘’the seriousness with which courts view abuses by directors and senior managers of corporations who occupy positions of substantial trust in the investment community”.
“To say the least, the court’s judgment demonstrates that this trust was most seriously abused in this case.”
