Financial Markets Authority’s demand that property developer Du Val Group rework its marketing campaign for a $100 million mortgage fund offering a 10 per cent return was upheld by the High Court. Du Val claimed to be targeting ‘wholesale investors’ only, while placing ads on social media and widely read news websites.
Ultimate ownership of the Du Val Group rests in part with Charlotte Clarke who with husband Kenyon has seen their upmarket lifestyle splashed across both print media and social media. Legal issues followed a 2021 media campaign promoting Du Val’s $100 million mortgage fund. The FMA claimed advertisements and promotional material were misleading in that they understated investment risks using wording that implied the best of both worlds: both high security on offer and the promise of high returns. FMA issued a direction order demanding specified wording and phrases be deleted from advertisements and that a publicity video be taken down. Direction orders are at the lower end of FMA’s enforcement arsenal.
Du Val challenged the direction order. It said Du Val’s investment offer was aimed at ‘wholesale investors’ only; sophisticated investors who are capable of making their own assessment of a potential investment, having no need for the detailed disclosures mandatory when investments are offered to the public in general. FMA said use of social media as a marketing channel inevitably meant that less experienced investors would be attracted to the proposed investment. It was no defence, FMA said, for Du Val to say it would weed out unqualified investors. Some investors might deliberately or unwittingly certify themselves as wholesale investors.
In the High Court, Justice Gault referred to advertising guidelines issued by the Australian Securities & Investment Commission. Permitted content is to be measured against the audience an advertisement actually reaches, not the audience the promoter would like. Du Val’s challenge to FMA’s direction order was dismissed.
Du Val Capital Partners Ltd v. Financial Markets Authority – High Court (30.06.22)
22.115