ASIC began investigating affairs, sought to freeze bank accounts involved
The Australian Federal Court issued orders to wind up an unregistered managed investment scheme pursuant to s 601EE(2) of the Corporations Act 2001 (Cth) and the second defendant in the proceeding under s 461(1)(k) of the Corporations Act.
From at least 1 January 2020 to 15 August 2025, the defendants in Australian Securities and Investments Commission v Cotton operated an unregistered managed investment scheme with at least the following features:
Under the scheme, the first defendant represented to and/or agreed with investors that:
The Australian Securities and Investments Commission (ASIC) commenced investigating the affairs of those involved. In August 2025, ASIC initiated proceedings to freeze the accounts to keep investor funds safe while its investigation remained pending.
ASIC also applied to facilitate the orderly administration of the remaining assets and to enable the identification and potential return of any available funds to investors.
On 10 September 2025, Justice SC Derrington issued asset preservation orders over the first and second defendants’ property under s 1323(1)(h) of the Corporations Act.
Through receivership orders dated 15 December 2025, Justice Button appointed two joint and several receivers of the defendants’ property on a limited basis.
ASIC sought to wind up the unregistered managed investment scheme in an effort to protect existing and future investors.
On 16 April 2026, the defendants initiated a Federal Court proceeding. Through this proceeding, they sought to wind up the scheme under s 601EE(2) of the Corporations Act and to relieve the first defendant from any liability incurred due to any breach of s 601ED of the Corporations Act.
While the parties agreed to the winding-up orders, they disagreed on who should bear the costs of the proceedings.
The Federal Court of Australia made orders to wind up the scheme under s 601EE(2) of the Corporations Act and the second defendant under s 461(1)(k) of the Corporations Act.
For the winding up of the scheme and the second defendant, the court appointed the previously designated receivers as joint and several liquidators under ss 472(1) and 601EE(2) of the Corporations Act.
Pursuant to s 601EE(2) of the Corporations Act and subject to further court orders, the liquidators should conduct the winding up as if the scheme were a company or corporation, could investigate, and could do in Australia and beyond everything necessary or convenient for winding up.
In its media release, ASIC noted that the liquidators’ appointment replaced the prior asset freezing orders and the previously ordered appointment of receivers.
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