Open4Sale promised $57bn revenue with zero income history. Directors now face $2.8m penalty and decade-long corporate bans.
What’s happening: Two Open4Sale Global directors have been fined $2.8 million by the Federal Court for fundraising without proper disclosure documents, with one director transferring investor money for personal use.
Why this matters: The case shows how investors can be left vulnerable when companies bypass disclosure requirements, with 83 people receiving no proper documentation about their investments.
A Federal Court has delivered a scathing judgment against two directors of Australian company Open4Sale Global Ltd, imposing $2.8 million in penalties for what Justice Charlesworth described as a “disgraceful course of conduct.”
Managing director Simeon La Barrie, who was fined $2 million, transferred over $1.4 million of investor money to accounts associated with him, using the funds to pay for personal expenses including rent and school fees. Court documents reveal La Barrie referred to shareholders as ‘idiots’ in professional correspondence on two separate occasions.
The Federal Court found Open4Sale, La Barrie and Australian director Ewald Hafer breached disclosure laws when raising over $1.3 million from 83 investors between March 2019 and July 2023 without providing compliant documentation to ASIC or investors.
Court finds misconduct
Instead of proper disclosure documents, investors received only marketing pitch decks alongside application forms. These materials made unverified claims that Open4Sale would generate US$57 billion in revenue within five years, despite having no reasonable basis for such forecasts.
Financial reports presented to the Court showed Open4Sale generated no income between 2016 and 2022 and accumulated nearly $9 million in net losses during this period.
ASIC Deputy Chair Sarah Court said: “Disclosure laws exist to make sure that investors are clearly and accurately informed about the nature of their investments and how their money will be used. In this case, no such documentation was provided, with investors simply provided with marketing pitch decks alongside application forms.”
Personal expenses exposed
Evidence before the Court showed La Barrie transferred over $1.4 million of investor money to accounts associated with him, using some of it to pay for personal expenses such as rent and school fees.
Justice Charlesworth noted the seriousness of this conduct, saying: “The evidence discloses a disgraceful course of conduct on the part of Mr La Barrie, accompanied and explained by his defiant attitude to the law.”
Hafer, who was fined $800,000, received $137,975 in commissions for signing on new investors since 2019. The Court found he had the ability to stop raising money from investors while there was no accompanying disclosure document but failed to do so.
“The inference arises that Mr Hafer chose instead to continue to breach the Corporations Act because he personally benefited from attracting yet more investment by his receipt of a commission, and I so find,” Justice Charlesworth said.
Decade-long bans imposed
Beyond the financial penalties, La Barrie has been disqualified from managing corporations for 12 years, while Hafer faces an eight-year disqualification period.
Both La Barrie and Open4Sale are restrained from future non-compliant fundraising for 12 years, with Hafer restricted for eight years.
Justice Charlesworth rejected submissions that the conduct had not yet caused harm, noting that the company’s records “are so poor it is not possible to discern its actual financial position.” The Court declined to order penalties against Open4Sale itself.
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