Sydney financial adviser, Graham Ronald Flegg, of now-defunct licensee Elm Financial Services, has been banned for three years after losing a retiree couple $1 million in a risky related product.

Announcing the ban, the Australian Securities and Investments Commission (ASIC) said Flegg had in February 2004 arranged for a retiree couple to invest their entire $1 million nest egg in Elm Nominee Notes, a risky unsecured product which was related to Flegg’s licensee and subsequently defaulted all its obligations. ASIC found Flegg had breached the Corporations Act by failing to make impartial inquiries into the investment and its suitability for the couple’s needs. ASIC also found Flegg had recommended a separate $40,000 investment to the couple without bothering to provide a written Statement of Advice, as required by law. In October last year the NSW Supreme Court issued banning orders against five men associated with the failed Elm financial planning group: Dennis Howell Terracini, Grant McCartney, Andrew Dennis Terracini, Howard Young and Robert John Kay. ASIC had alleged that each of the five were involved in illegal fundraising, misleading and deceptive conduct and contraventions of directors’ duties. Elm took over part of the notorious Saxby Bridge dealer group in 2002. Robert Kay was also associated with the Saxby group. In 2004 Elm entered a deed of company arrangement after a number of its property-based deals fell apart leaving investors over $10 million out of pocket.

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