It is now official: Westpoint Corporation Pty Ltd will be wound up and the estimated 3600 "investors" (principally retirees) will lose their money (totalling around $300 million).

It appears that that the promoters raised funds by issuing promissory notes (unsecured IOU’s) for amounts of at least $50,000 so that they would not have to comply with the debenture rules in the Corporations Act.

The funds were raised for property developments around the country. The investments were not secured against the developments and it appears that funds raised for one development were mixed with funds for other develoipments. The Corporations Act Managed Investment Scheme rules were not complied with.

Retirees were targeted through financial planners who were paid commissions. Some investors borrowed on the security of their home.

It is likely that financial planners and perhaps the Westpoint auditor will be sued in a class action.

Meanwhile ASIC is on the defensive over its apparent surveillance and supervision failure .

Yes, people can be greedy and invest unwisely. But ASIC’s role is to enforce consumer protection laws and ensure that promoters comply with the rules and that advisers give advice appropriate to their clients.

UPDATE 22 February: class action announced

UPDATE 14 April: ASIC Bulletin and update on court action