The Australian regulator, ASIC,  took legal action against LM Investment Management and its founder, former Kiwi, Peter Drake alleging Drake “used his position to gain an advantage for himself and the former directors breached their director’s duties for failing to act with the proper degree of care and diligence regarding transactions involving the LM Managed Performance Fund (MPF).”

In a ruling, issued just before Christmas, the Federal Court found that Peter Charles Drake, Francene Maree Mulder and Eghard van der Hoven did not breach their duties as directors of LM Investment Management Ltd (LMIM).

ASIC had alleged that Drake used his position to gain an advantage for himself and that each of the former directors of LMIM breached their director’s duties by failing to act with the proper degree of care and diligence regarding transactions involving the LM Managed Performance Fund (MPF), an unregistered managed investment scheme with about 4,500 investors.

The MPF loaned funds to Maddison Estate Pty Ltd, to complete a property development on the Gold Coast known as ‘Maddison Estate’. ASIC's case focused on a decision of the directors to extend the loan in 2012.

ASIC said, in a statement, it is reviewing the Court's decision and has no further comment at this time.

LMIM collapsed in 2013. It was responsible for managing at least A$800 million on behalf of about 12,000 investors in Australia and overseas. The LM funds were promoted in New Zealand by a number of organisations including Money Managers.