ASIC sues former Dixon Advisory director Paul Ryan for breaching his duties before collapse

The corporate regulator alleges Paul Ryan breached his duties as a director by altering the constitution of Dixon Advisory to favour its holding company days before it collapsed.

ASIC deputy chair Sarah Court. Picture: Ian Currie

Australia’s corporate regulator is taking legal action against a director of self-managed super fund provider Dixon Advisory for allegedly failing to consider the interests of creditors and thousands of clients days before it collapsed.

The Australian Securities and Investments Commission alleges that Paul Ryan breached his duties as a director by making decisions that were to the advantage of Dixon Advisory’s holding company, E & P Operations, where he was also a director.

Due to go before the Federal Court, ASIC claims that Mr Ryan amended the constitution of Dixon Advisory on December 22, 2021, to expressly authorise its directors to act in the interest of E & P Operations.

This came as he executed a deed of acknowledgment of debt three days later to the advantage of E & P Operations and to the detriment of Dixon Advisory.

ASIC further alleges that at the time of the deed, E & P Operations owned Dixon Advisory over $19m, which the deed imposed conditions which adversely affected the collapsed group’s right to recover the debt.

The regulator said that the deed came as Dixon Advisory was approaching insolvency and therefore its directors were obliged to consider the interests of creditors.

Dixon Advisory, once the fourth largest self-managed super fund provider in Australia, later announced on January 19, 2022, that it had filed for voluntary administration wound up.

Mr Ryan’s employer, E & P Financial, on Friday continued to back its managing director and chief executive – wealth, telling investors in an ASX release that he has denied any wrongdoing and would look to “vigorously defend the proceedings”.

“E & P considers that Mr Ryan has always acted with integrity in his role as a director of DASS, including in the weeks leading up to the appointment of the voluntary administrators of DASS. Mr Ryan will continue in his current roles at E & P,” E & P Financial said in its statement.

E & P and its subsidiaries are not parties to the proceedings being taken by the regulator.

ASIC deputy chair Sarah Court said directors had responsibilities under the law to act in the best interests of their company, and this included considering the interests of creditors when the company is facing insolvency.

“The creditors included thousands of financial advice clients who had invested in the US Masters Residential Property Fund and financial products operated by entities related to Dixon Advisory. These creditors suffered significant losses,” she said.

The Federal Court last September imposed a $7.2m penalty on Dixon Advisory after six representatives failed to act in their clients’ best interests.

In November, administrators of Dixon Advisory urged clients of the collapsed wealth management firm not to vote to wind up the company, warning creditors could see just as 0.1c in the dollar.

Originally published as ASIC sues former Dixon Advisory director Paul Ryan for breaching his duties before collapse