EverBlu boss Adam Blumenthal agrees to a peace deal with ASIC which will cost him $1.1m

ASIC has extracted a financial settlement and a court enforceable undertaking from EverBlu boss Adam Blumenthal for breaching obligations under its Australian Financial Services licence.

ASIC deputy chair Sarah Court. Picture: Aaron Francis

Former Creso Pharmaceuticals and EverBlu Capital chair Adam Blumenthal has agreed to a peace deal with the corporate regulator under which he will accept a five-year ban and pay $1.1m.

The deal brokered between Mr Blumenthal and the Australian Securities and Investments Commission comes in the wake of raids on the Creso Pharma and private equity boss in 2021.

ASIC announced on Friday Mr Blumenthal would pay an $850,000 fine, $150,000 in investigation costs and a further $100,000 in litigation costs.

In addition Mr Blumenthal will cease being involved in financial services for five years and will step away from EverBlu – his corporate advisory operation. However, Mr Blumenthal will maintain ownership of a financial services business.

Mr Blumenthal told The Australian he accepted the enforceable undertaking with ASIC.

“I accept the ASIC decision and I am relieved this civil case is behind me. I am grateful ASIC has allowed me to maintain ownership of a financial services business,” he said.

Quinn Emanuel partner Elan Sasson brokered the deal for Mr Blumenthal with ASIC.

ASIC said its investigation into Mr Blumenthal and EverBlu revealed the firm had breached its obligations under its Australian Financial Services licence by failing to put in place proper controls and follow procedures relating to dealing with client orders and the use of a suspense account to manage trades in Creso Pharma’s shares.

Mr Blumenthal’s relationship with Creso had come under attention after the Australian Securities Exchange censured the cannabis company for failing to disclose the Sydney stockbroker had tipped $1m into a $5m raise which had been led through EverBlu Capital.

ASIC found Mr Blumenthal had breached a so-called “Chinese wall”, after being added to the register in March 2021.

This “Chinese wall” was intended to restrict information from those dealing in EverBlu’s shares and services before it was disclosed to the market.

ASIC found a substantial portion of the almost 378 million shares traded in Creso by a suspense account linked to EverBlu were done during the period Mr Blumenthal was bound by the “Chinese wall”.

The ASX had also taken issue with Creso’s failure to disclose it had taken funds from a related party to a company director.

Mr Blumenthal stepped down as Creso’s chair in November 2021 after the ASIC raids.

The regulator said it had found EverBlu had advanced $7m to social media influencer Tyson Scholz which was used to buy shares in Creso Pharma.

In addition, ASIC found Mr Blumenthal had “engaged in market rigging when on 14 occasions (on 10 separate days) he caused or enabled certain client orders to purchase Creso shares, intending to represent to the market that there were more individual bidders for Creso shares than existed”.