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A Sydney financial “licensee for hire” business is being pursued by the corporate regulator for allegedly having no compliance staff and inadequate risk management processes, despite firms responsible for over $1 billion in funds operating under its umbrella.
Around 200 people working for 60 financial services providers operated under the licence of Lanterne Fund Services including prominent venture capital firms, and entities linked to racing personality Tom Waterhouse and the TV show Shark Tank.
The Lanterne Fund Services website before it was taken down on Thursday afternoon.
While Lanterne did not provide financial services directly to clients, it authorised other providers to operate under its financial services licence, and collectively charged fees of around $180,000 a month.
But ASIC has accused Lanterne of operating a “wholly deficient business” with no compliance staff and almost no risk management processes in place.
Documents filed by ASIC in the Federal Court of Australia on Wednesday allege that between March 2019 and October last year, Lanterne had only one full-time employee, Peter Cozens, who is also the sole director of the company. There were several part-time employees, but their roles were limited to administration.
Cozens and Lanterne did not respond to repeated requests for comment and its bare-bones website was taken down on Thursday.
Up until September, 2020, Lanterne maintained records using a paper filing system and had “limited technological resources” with “no internal IT capability”, the court documents claim. They also allege Lanterne relied on a compliance manual which was out of date and inapplicable to its business.
Those operating under Lanterne’s licence included venture capital funds, managed investment schemes, corporate advisory services and climate change advisory services across industries including renewable energy, healthcare, real estate, and biotechnology and agriculture.
The venture capital firms using Lanterne's license include Brisbane-based Sprint and Sydney-based Folklore among a raft of others. Ten13, a "venture syndicate" that offers deals to wealthy investors and grew out of Shark Tank "shark" Steve Baxter's private fund, also uses its license as does Waterhouse VC, the venture firm of racing and wagering scion Tom Waterhouse.