Ex-MSF chief Michael King fails to have ban lifted

MFS Investment Management dishonestly misused hundreds of millions of dollars of ­investors’ money.

Michael King has failed to have his management ban overturned.

The former chief executive of MFS Investment Management, which dishonestly misused hundreds of millions of dollars of ­investors’ money, has lost a bid to have his 20-year disqualification from managing corporations overturned.

MFS Group was an ­invest­ment powerhouse before its collapse in 2008, owing $2.5 billion.

Former CEO Michael Christodoulou King, 54, was among a group of directors who were banned and ­ordered to pay fines and compensation after overseeing the spectacular collapse.

Mr King was disqualified from managing corporations in 2017, at the same time he was ­ordered to pay $177 million in compensation to investors, a $300,000 pecuniary penalty and 60 per cent of court costs ­accumulated by the Australian ­Securities & Investments Commission.

He has twice challenged the decision in the Queensland Court of Appeal, which yesterday rejected his claim that he should not be disqualified from running a company.

The Supreme Court of Queensland ruled in 2016 that MSF had misused money ­belonging to its $770m Premium Income Fund, which was primarily made up of retirees’ life savings. The court found MSF had used PIF money to pay off debts accumulated by other companies in the group.

The former directors and officers, including Mr King, were ­ordered to pay $615m in compensation to more than 10,000 investors in what is believed to be among the biggest compensation orders relating to a company collapse in Australian history.

Yesterday’s ruling noted that there was “no suggestion by Mr King that the investors will actually be compensated”, despite the compensation order.

A subsequent appeal found Mr King was not an officer of the company — a decision that ASIC had appealed in the High Court — but the penalties were upheld.

The latest appeal lowered the pecuniary penalty from $300,000 to $270,000 and cut the amount he had to pay to cover ASIC’s court costs to 50 per cent.

Mr King, who told the court he had been financially ruined by the fund’s collapse, said the finding of dishonesty had killed his chances of practising as a solicitor in the future.

He said he had gained no personal benefit from the misuse of the investor funds and had not masterminded the scheme.

The appeal court upheld the dishonest conduct finding, finding “his conduct resulted in huge losses to investors”.

“He used his position in the MFS Group to encourage MFSIM to misuse a very substantial amount of money held on trust,” the judgment said.