The Australian Prudential Regulation Authority (APRA) has welcomed the Queensland Supreme Courts decision to appoint a liquidator over entities associated with Wealth Accelerator Systems (WAS).  The decision comes after an application was made to the court by the Australian Securities and Investments Commission (ASIC), which had commenced what became known as the Groundhog litigation in 2001.

APRA had started a similar action in the Federal Court in the same year and successfully restrained WAS and other parties from contravening the Banking Act and taking deposits without a banking authority.  The obtained orders prohibited withdrawals from bank accounts believed to hold investors funds, thereby ensuring funds were not dissipated before the legal proceedings were finalised.  The funds were subsequently consolidated in a single account and effectively frozen pending a final hearing of the matter.

APRAs Head of Enforcement, Dr Darryl Roberts, said that ASIC has the power to apply to the court for the appointment of a liquidator and APRA will support the transfer of funds currently frozen by its own proceedings to the liquidator.

We do not know whether the other parties to APRAs proceeding will consent to the transfer, he said. The appointment has the advantage of ensuring a controlled distribution of monies amongst various claimants without the necessity to await the outcome of a lengthy hearing.

Under the Courts Order the liquidators are obliged to notify each investor of their appointment and the timetable for winding up the Companies and provide them with any relevant reports.

Further information on APRAs legal action is available on the website at www.apra.gov.au.