Former Creso Pharma chairman Adam Blumenthal has been fined $850,000 by the corporate watchdog and banned for five-years for allegedly breaching his director duties, including market rigging in relation to share trading in the listed cannabis company.
Blumenthal will also pay $150,000 towards the cost of an investigation by the Australian Securities and Investment Commission (ASIC) and a further $100,000 towards costs.
But he will be allowed to retain ownership of a financial services company even though he must step aside from the finance industry, and his EverBlu Capital advisory company, for five years.
Blumenthal told The Australian he accepted ASIC’s ruling and expressed his gratitude at being allowed to maintain ownership of a company.
The investigation into Blumenthal emerged in November 2021 when the Federal Police raided the offices of EverBlu.
He stepped down as Creso chairman later the same month.
Among his alleged offences were his involvement in rigging the market in relation to share trading in then-Creso, now Melodiol Global Health.
ASIC said its investigation uncovered 14 occasions where clients of EverBlu purchased Creso shares with the “intention of representing to the market that there were more individual bidders for Creso shares than existed”.
The deals were designed to “create, or the cause the creation of a false or misleading appearance with respect to the market for Creso shares on the ASX”, ASIC added.
The regulator accused EverBlu of advancing $7 million to a social media influencer to buy Creso shares, while another client was loaned $5m.
ASIC said Blumenthal and EverBlu breaches their obligations under its Australian Financial Services licence (AFS) by failing to properly follow procedures and put in place adequate controls relating to the receipt and execution of client orders, the use of a suspense account, the maintenance of records and the management of conflicts of interest.
In addition to Blumenthal being banned from the financial services industry for five years, EverBlu will have its AFS licence cancelled.