Question: LAW2485 FINAL ASSIGNMENT - SEMESTER 2 2024 GENERAL INSTRUCTIONS: 1. Due date is before 5pm Saigon time on 20 September 2024. Please note that an
LAW2485 FINAL ASSIGNMENT - SEMESTER 2 2024 GENERAL INSTRUCTIONS: 1. Due date is before 5pm Saigon time on 20 September 2024. Please note that an assignment submitted later than the deadline will receive a penalty. For more information about late submission and the penalty, please read the instructions on Canvas. 2. On an assignment cover sheet, you must identify your name(s), a student ID(s), a lecturer name(s), and the time of your tutorial (e.g., Tuesday 11.30 tutorial). 3. Electronically submit the assignment through Turnitin on Canvas. No email submissions will be accepted. 4. The assignment must also contain appropriate referencing in the form of footnotes and bibliography in conformity with the AGLC. The bibliography must include all materials that you have cited. 5. You must use IRAC. 6. The word limit is 2500+/- 10%. The word limit should exclude footnotes and bibliography. 7. See the marking rubric on Canvas for more information for each grade band. QUESTION MapleLeaf Investments & Advisory Services Pty Ltd (MapleLeaf) holds an Australian Financial Services License (AFSL) and has recently initiated the "GreenFuture Fund," a managed investment scheme that invests in renewable energy, focusing particularly on speculative early- stage solar energy startups. Sophie Turner, a 68-year-old retiree diagnosed with early-stage Alzheimer's disease, was drawn to the GreenFuture Fund after attending a promotional seminar hosted by MapleLeaf. Sophie's condition moderately impairs her decision-making capabilities, making complex financial decisions particularly challenging. At the seminar, James Peterson, a financial adviser from MapleLeaf, provided attendees with promotional materials that included misleading exponential growth charts and testimonials from supposedly satisfied investors. During his presentation, James portrayed the GreenFuture Fund as "practically risk-free" with "guaranteed returns" of 15% annually, targeting retirees seeking stable income. Sophie, intrigued by the presentation, scheduled a private meeting with James to discuss her potential investment. During this meeting, James reiterated the claims about the fund's performance and safety. He rushed through the consultation, did not ask about Sophie's health condition, financial needs, or her understanding of the risks associated with startup investments. What is more, James also failed to disclose his own financial incentives linked to promoting the fund. Three months after Sophie invested a substantial portion of her retirement savings, the GreenFuture Fund reported significant losses due to the poor performance of the involved startups, some of which were nearing insolvency. An investigation revealed that the fund's due diligence was grossly inadequate, and James's conflicts of interest, as well as the misleading promotional materials used during the seminar and private meeting, were exposed. Sophie, now facing considerable financial distress, seeks to understand her legal rights with a particular focus on the conduct of MapleLeaf, the management of the GreenFuture Fund, and the advice provided by James. It was also revealed that: Despite the firm's responsibility to uphold stringent oversight and compliance standards, MapleLeaf demonstrated significant shortcomings: MapleLeaf utilized promotional materials that prominently featured exaggerated growth projections and testimonials from non-existent investors during seminars targeted at retirees. These materials falsely depicted the GreenFuture Fund as offering "guaranteed returns" with minimal risks. James Peterson, a financial adviser at MapleLeaf, received undisclosed commissions from solar startups included in the GreenFuture Fund for directing investments to them. This situation was neither managed nor disclosed to investors. MapleLeaf failed to provide adequate training and supervision to its financial advisers. This lack of oversight allowed James to provide advice without proper ethical and legal considerations, leading to a breach of trust and compliance. James Peterson, during his interactions with Sophie Turner, a 68-year-old retiree with early-stage Alzheimer's, showcased multiple failures: In the private meeting with Sophie, James neglected to conduct a thorough analysis of Sophie's financial situation and needs. He rushed through the consultation, focusing solely on promoting the GreenFuture Fund without assessing its suitability for Sophie's circumstances. James repeatedly assured Sophie of the fund's safety and high returns without discussing the speculative nature of the investments and the high risks associated with startup ventures. With James's awareness of Sophie's condition (discussed briefly in their initial interaction but not factored into his advice), he failed to adjust his approach to acknowledge her vulnerability, thereby not fulfilling the heightened legal responsibilities required when advising clients with diminished capacity.
During both the seminar and the private consultation, James reiterated misleading claims about the fund's performance and safety. The GreenFuture Fund, managed by MapleLeaf Investments & Advisory Services Pty Ltd, demonstrated significant governance and operational shortcomings, which not only compromised the fund's performance but also contravened multiple legal requirements. The investigation into the GreenFuture Fund's portfolio revealed that the due diligence performed on the invested solar startups was not only inadequate but almost non-existent. MapleLeaf had failed to verify the financial viability and operational stability of these startups, many of which were without any proven business models or viable products. The promotional materials suggested that the startups were market leaders in solar technology with secured patents and significant commercial engagements, which was categorically untrue and misleading to investors. The fund managers did not disclose the high-risk nature of investing in early-stage companies. The risk assessments that were supposed to be part of the investment strategy were either superficial or deliberately omitted. The fund's investment strategy, as described to investors, was to support stable, growth-oriented renewable energy companies. However, the actual investments were speculative and not aligned with this strategy, constituting a breach of the fund's stated objectives and investment mandate. The GreenFuture Fund's operations did not comply with the stringent compliance standards required for managed investment schemes. This includes failures in establishing an independent compliance committee to oversee fund operations and ensure alignment with legal and regulatory requirements. The fund managers were also stakeholders in some of the invested startups, a conflict of interest that was not disclosed to the investors. The fund's assets were disproportionately allocated to high-risk ventures without adequate diversification strategies, exposing the fund and its investors to undue financial risks. The fund maintained insufficient liquidity reserves which put the fund at risk of not being able to meet the redemption requests of investors. The board overseeing the GreenFuture Fund lacked members with expertise in renewable energy investments, resulting in poor governance and oversight of fund activities. There was a systematic failure to provide timely and accurate communications to investors regarding the performance and management of the fund, especially as the startups began failing. REQUIRED: Discuss all legal issues raised in this question. Apply relevant Australian law. Relevant legal concepts/ issues from weeks 10-11 are examined. Total 50 marks
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