Australia’s financial regulator has secured extended court orders freezing the assets of investment firm First Mutual Private Equity and its director, Gregory Cotton, over allegations that $53 million in investor funds may have been diverted to gambling activities.
The Federal
Court of Australia extended asset preservation orders originally imposed
on Aug. 15, preventing Cotton and First Mutual from accessing
bank accounts or incurring new liabilities until further notice. The
orders were agreed to by consent, meaning the defendants did not contest
the extension.
ASIC Probes Missing
Investment Trail
The
Australian Securities and Investments Commission (ASIC) initiated the freeze
after discovering that Cotton and First Mutual allegedly collected around
$53 million from investors between March 2024 and July 2025, ostensibly for
investment purposes. However, ASIC suspects a significant portion of these
funds went toward gambling rather than legitimate investments.
“So
far, no underlying investment of those monies can be identified by ASIC,”
the regulator stated, raising questions about where the
investor funds actually went.
Cotton must
now file a detailed affidavit by Sept. 25 disclosing his personal and company
assets, liabilities, income sources, and client relationships. The court
order requires comprehensive financial disclosure while the investigation
continues.
Court Allows Limited
Living Expenses
While the
asset freeze remains in place, the court permitted Cotton to withdraw up to
$800 per week for ordinary living expenses. Both defendants can also
pay legal costs related to the proceedings with five days’ prior
notice to ASIC.
The
regulator is expanding its investigation to examine any investor payments
made to Cotton and First Mutual before March 2024, suggesting the
suspected scheme may have operated longer than initially known.
Related: ASIC Admits Its Own Rules Were Too Complex, Deletes 9,000 Pages of Red Tape
Separate Case Hits
Australian Fiduciaries
In a
related enforcement action announced the same day, ASIC secured court-appointed
receivers for two more entities connected to troubled fund manager Australian
Fiduciaries Limited. The Federal Court ordered receivers from SV Partners
to take control of SRI Fiduciaries 2 and SRI Fiduciaries 3 on Sept. 4.
These
appointments bring the total number of Australian Fiduciaries-related entities
under court oversight to 30, all either in liquidation or subject to asset
freezing orders. Around 600 retail investors put approximately $160
million into Australian Fiduciaries schemes since February 2020, primarily
through self-managed super funds.
ASIC is
investigating concerns about conflict management, investor sales practices,
valuation failures, and asset value losses across the Australian
Fiduciaries network. The fund manager stopped distributing units in
September 2023.
Both cases
highlight ASIC’s intensified scrutiny of investment schemes that may be
misusing retail investor funds, particularly those targeting self-managed
superannuation fund investors.
You may also like: Australian Adviser Gets Six-Year Ban Over Fund Steering
This article was written by Damian Chmiel at www.financemagnates.com.
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