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Australian regulator writes to accountants group about Guvera fundraising 

By | Published on Friday 7 July 2017


The Australian Securities And Investments Commission has sent a letter to the country’s Institute Of Public Accountants expressing concerns about the kind of fundraising methods allegedly used by failed streaming music firm Guvera.

As previously reported, it emerged last month that ASIC was investigating the approach of Amma Private Equity, which raise millions for the Guvera company from grassroots investors. It is alleged that Amma didn’t follow rules designed to protect unsophisticated investors who don’t necessarily understand the risks associated with the investments they make, and who often can’t afford to lose the money they invest.

According to The Courier-Mail, the letter from ASIC outlines a process where accountants advise their clients to establish a company trust via which to invest, which is then run by a third party, possibly the accountant themselves. Because that trust is run by someone with an accountancy background they qualify as a sophisticated investor, meaning that the company being invested in no longer has to provide the extra documentation required under law when you are tapping grassroots investors for cash.

The letter says that “ASIC is concerned that this structure is being used in an attempt to circumvent the prohibition on offering shares to non-sophisticated investors without a disclosure document”, before specifically stating that the regulator was “concerned that Amma is utilising a network of accountants” to pursue a scheme of this kind.

As well as Guvera, Amma has also raised finance for video messaging app Kwickie, another start-up which – until recently – Guvera had equity in. In its letter, ASIC specifically states that shares in Kwickie must not now be offered to less sophisticated investors via a trust structure.