Evans Dixon shares fell more than 13 per cent on Friday after the wealth manager informed the market that the Australian Securities & Investments Commission had launched legal proceedings against one of its subsidiaries.
The concern among some is that the company will not have the funds to pay the fines from ASIC and will need to raise capital. In its statement on Friday, ASIC alleged there had been 126 breaches of the Corporations Act.
The understanding is that the cost of each breach is about $1m to the company, and its market value is only about $124m.
On Friday, Evans Dixon said ASIC had launched legal action against its subsidiary, Dixon Advisory & Superannuation Services, alleging best interest obligation breaches under the Corporations Act.
This was with regard to personal product advice offered in relation to investments in the US Masters Residential Property Fund.
Evans Dixon said it would defend the proceedings.
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