Holly Grofski, a former Director of Global Merces Funds Management, a defunct investment firm that was based in Sydney, has been convicted for dishonest conduct, Financial Standard reports. The conviction follows her initial charge in May 2021.
The Brisbane District Court handed down the judgment, sentencing Grofski to six months imprisonment after finding her guilty. She is to be released after the 18-month period provided she maintains good behavior while serving out the term and after entering a recognizance of $1,000.
Court Slams Global Merces' Grofski
During her tenure as the Director of Global Merces, Grofski engaged in the creation of a fictitious 'loan agreement', falsely claiming that the company had received a loan of $500,000. However, the court ruled that the document was a misleading representation as Grofski orchestrated the transfer of $500,000 from investor funds' into Global Merces' operating account.
Furthermore, the former director presented the falsified loan agreement and evidence of the $500,000 account balance to the auditors of Global Merces. Her intention was to dissuade the auditors from raising concerns about the solvency of Global Merces, an Australian financial services licensee, to the Australian Securities and Investments Commission (ASIC).
However, Grofski lacked the authorization to utilize the $500,000 of investor funds for this purpose. Shortly after providing the auditors with evidence of the account balance, she transferred the funds out of the operating account and invested them based on the instructions of the investor.
As a result of the conviction for dishonesty-related offenses, Grofski will be automatically disqualified as a company director for a period of five years, the outlet reported.
ASIC Cancels Global Merces' AFS License
On October 28, 2021, Grofski admitted guilt on one count of providing false information to the auditors of Global Merces and another count of engaging in conduct leading to the falsification of books and records pertaining to the affairs of the company. This admission underscores the gravity of her actions and the impact they had on the integrity of Global Merces' financial operations.
Prior to these developments, ASIC took regulatory action against Global Merces. On January 21, 2020, the Australian securities regulator suspended the Australian Financial Service (AFS) license of Global Merces for a period of six months. This suspension was a response to concerns raised about the company's regulatory compliance.
Following ASIC's license suspension, on January 31, 2020, a federal court issued an order for the winding up of Global Merces. This decision was a result of the investigation and concerns surrounding the company's conduct.
Subsequently, on July 20, 2020, ASIC made the decision to cancel the AFS license of Global Merces. The cancellation of the license further emphasized the regulatory concerns and the need for decisive action against the company.
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