Two directors of Open4Sale Global Ltd have been hit with penalties totalling $2.8 million after the Federal Court found they breached disclosure laws while raising more than $1.3 million from 83 investors over four years.
The court found Open4Sale, managing director Simeon La Barrie and Australian director Ewald Hafer raised funds between March 2019 and July 2023 without providing compliant disclosure documentation to investors or the Australian Securities and Investments Commission (ASIC). Mr La Barrie was fined $2 million and Mr Hafer $800,000. The court declined to impose a penalty on the company.
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.’
The pitch materials claimed Open4Sale would generate US$57 billion in revenue within five years, despite the court being told there was no reasonable basis for those forecasts. Financial reports before the court showed the company recorded no income between 2016 and 2022 and accumulated nearly $9 million in net losses. The court also heard Mr La Barrie transferred more than $1.4 million of investor funds to accounts associated with him, using some of the money to cover personal expenses including rent and school fees. He had, on two occasions, referred to shareholders as ‘idiots’ in professional correspondence.
In her reasons, Justice Charlesworth said, ‘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.’
Her Honour said Mr Hafer, who received $137,975 in commissions for bringing in new investors since 2019, could have halted fundraising while no disclosure document was in place but did not 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,’ Her Honour said. She also rejected arguments that investors had not suffered harm, noting the company’s records ‘are so poor it is not possible to discern its actual financial position.’
Mr La Barrie has been disqualified from managing corporations for 12 years and Mr Hafer for eight years. Mr La Barrie and Open4Sale are restrained from future non‑compliant fundraising for 12 years, and Mr Hafer for eight years.
Open4Sale, an unlisted public company incorporated in 2012, is led by US‑based founder and managing director Mr La Barrie, who approved share issues and controlled the bank account receiving investor funds. Mr Hafer met with prospective investors and distributed application forms. Under section 727 of the Corporations Act, offers of securities that require disclosure must be accompanied by a lodged disclosure document.
