In this edition, we discuss infringement notices issued by the Australian Securities and Investments Commission (ASIC) to a debt management company for misleading claims, penalties imposed by the Federal Court of Australia for breaches of conflicted remuneration rules and the Supreme Court of New South Wales’ intervention in a board deadlock situation. We also discuss the Australian Competition and Consumer Commission’s (ACCC) proceedings against Ateco Automotive Pty Ltd (trading as LDV Automotive Australia) (LDV) for alleged misleading advertising and provide an update on the latest developments in relation to the affairs of Emu NL (Emu) before the Takeovers Panel.
In Risk Radar, we discuss ASIC’s recent comments on the rise of deepfake attacks in corporate fraud and the importance of robust cyber resilience frameworks for boards.
Regulatory
ASIC issues infringement notices to debt management company for misleading claims
On 17 April 2025, ASIC announced that it issued two infringement notices totalling $37,560 to Chapter Two Holdings Pty Ltd for making allegedly misleading statements about debt management outcomes. The company claimed on its website that it had wiped $80 million in debt and saved consumers $30 million in interest, which ASIC alleges are false or misleading and which the company was not able to substantiate. This action reflects ASIC's commitment to ensuring that financial services companies accurately represent the services they provide to consumers.
Financial services provider penalised $11 million for breaching conflicted remuneration rules
On 24 April 2025, the Federal Court of Australia ordered DOD Bookkeeping Pty Ltd to pay $11 million in penalties for breaching conflicted remuneration rules and providing inappropriate financial advice. The company’s advisers instructed clients to roll over their superannuation into self-managed superannuation funds and to use those funds to buy property through a related entity of DOD Bookkeeping Pty Ltd. The Court found that the advice was "cookie-cutter" in nature and failed to consider individual client circumstances, and the advisers were influenced by bonuses paid when the clients settled on property offered through the related entity, in breach of conflicted remuneration laws. ASIC Deputy Chair, Ms Sarah Court, noted that misconduct exploiting superannuation savings is an enforcement priority for the regulator, and the size of the penalty demonstrates the seriousness of the misconduct, which the Court noted was “plainly deliberate and extended over a period of several years”.
ACCC initiates proceedings against Ateco Automotive Pty Ltd for misleading advertising
On 23 April 2025, the ACCC announced it has initiated proceedings in the Federal Court of Australia against LDV, alleging misleading representations about the durability and suitability of certain vehicle models, in breach of the Australian Consumer Law. The ACCC claims that LDV advertised that these vehicle models were of a certain toughness and suitability for various environments and off-road terrains, despite their propensity to rust or corrode within five years from manufacture. The ACCC further noted that in advertising a 10-year anti-corrosion warranty, LDV made representations to consumers that these vehicle models did not have a material risk of developing rust or corrosion in the first 10 years of manufacture. The ACCC alleges that LDV had no reasonable basis for making those representations. This case is a reminder of the importance of ensuring that the market is furnished with sufficient information to enable consumers to make an informed decision, and the potential consequences of misleading consumers. NEDs should ensure their companies' marketing practices are accurate and evidence-based to mitigate against the risk of regulatory scrutiny and to preserve consumer trust.
Legal
Supreme Court of New South Wales intervenes to resolve board deadlock
On 17 April 2025, the Supreme Court of New South Wales made orders to resolve a deadlock involving Heartland Group Pty Ltd (Heartland Group). The board of directors of Bernley Corporation Pty Ltd (Bernley), the majority shareholder of Heartland Group, previously resolved (with one director, Mr Turner, dissenting) to call a general meeting of Heartland Group at which resolutions would be proposed to remove Mr Turner as a director and to appoint a replacement director. The minority shareholder of Heartland Group, Boyded Industries Pty Ltd (Boyded), had two directors, one of whom was Mr Turner, and its board was deadlocked and unable to appoint a corporate representative to attend the general meeting of Heartland Group. The constitution of Heartland Group provided that two members comprise a quorum for a general meeting, and the general meeting therefore could not proceed in the absence of a corporate representative of Boyded. Accordingly, the Court made orders under sections 249G and 1319 of the Corporations Act 2001 (Cth) that a general meeting of Heartland Group be called and that a corporate representative of Bernley constitute a quorum of members at that meeting (i.e. including in the absence of a corporate representative of Boyded). This ruling underscores the Court's willingness to intervene when quorum requirements are used to obstruct or frustrate the ability of a majority shareholder to convene and conduct a general meeting and there is no prospect of the deadlock otherwise being resolved.
Takeovers Panel declines to conduct proceedings on Emu NL application and receives review application
On 17 April 2025, the Takeovers Panel declined to conduct proceedings on Emu's application in relation to its own affairs, regarding alleged associations among shareholders aiming for majority control of the Board, in the context of a requisitioned board spill meeting, as discussed in a previous edition of Boardroom Brief. The Panel found, in effect, insufficient material to justify further inquiries into the alleged association. On 23 April 2025, the Panel received a review application from Emu seeking a review of the Panel’s decision to decline to conduct proceedings. The President of the Takeovers Panel has consented to the application for a review. However, a review Panel has not yet been appointed at this stage and no decision has been made on whether or not to conduct proceedings.
Risk radar
When seeing isn’t believing: the evolving corporate threat of deepfake technology
As artificial intelligence continues to evolve at an astounding pace, so too does the cyber security threat landscape. Deepfake technology – once a novelty – has now emerged as a credible and growing cyber security risk in the context of corporate fraud. On 22 April 2025, ASIC published its latest corporate finance update noting the need to protect investors in a digital world and highlighting the sophistication and impact of two high-profile deepfake-enabled scams:
In 2019, a UK energy firm suffered a $243,000 irreversible loss after a finance director was tricked into transferring funds into a fraudulent account by an audio deepfake imitating the CEO’s voice; and
In 2024, a Hong Kong based company suffered a $25 million loss after a senior executive was tricked into transferring funds through a combination of deepfake audio recordings imitating a CFO’s voice and compromised emails.
ASIC’s update is a key reminder for NEDs to be cognisant of an often overlooked key vulnerability – the human instinct to trust familiar voices and authoritative communication, which can bypass traditional verification and authentication methods. As deepfake tools become increasingly more convincing, NEDs are reminded to stay alert and ensure their organisation’s cyber security frameworks are current, tested and responsive to emerging threat vectors. In a digital environment where appearances can and will deceive, it is clear that robust verification processes – not assumptions – are key to mitigating risk.