Flunked streaming music firm Guvera is being investigated by the Australian Securities And Investments Commission over allegations it misled inexperienced investors who have been left wondering what happened to the $180 million that was pumped into the company.
As previously reported, Australia-based Guvera finally crashed out of business last month. The company had never really recovered from its failed attempt at an Initial Public Offering a year ago, when the Australian Securities Exchange blocked the flotation in a highly unusual intervention based on concerns over the firm’s prospectus and business plan.
In the wake of the failed IPO, Guvera bailed on a number of countries and put two of its Australian subsidiaries into administration. One co-founder, Darren Herft, stood down from his executive role at the business, leaving the other co-founder, Claes Loberg, to run the company. He insisted the service could still succeed in certain emerging markets.
Then in May it emerged that Loberg had now resigned, and only Herft was left on the company’s board. At the time he said he was looking for two of the firm’s investors to join him on that board to help “rebuild our company”, reckoning that Guvera Limited still owned some “valuable IP” and was due a sizeable tax refund.
According to ABC, the ASIC has begun questioning a number of the company’s investors about how they came to invest in the risky business of streaming music. In the spotlight is how Guvera – and a private equity outfit also run by Herft – raised money from a large number of small-time investors via a network of accountants.
It is alleged that the accountants who encouraged their clients to invest in Guvera received referral fees and commissions, and/or free trips to investor conferences in places like Hawaii and Dubai. The ASIC is also reportedly investigating whether the marketing of Guvera shares breached sections of the country’s Corporations Act which are specifically designed to protect inexperienced investors.
ABC quotes one such investor, who bought $90,000 of Guvera shares in 2014, as saying “we’re asking the question: where did all the money go?” adding that “they should be held accountable. We should have answers”.
Responding to ABC’s questions by email, Herft insisted that Guvera had not abandoned its 3000 investors, declaring: “We have a platform and access to music rights and a company to fix for 3000 people”. Which suggests Herft thinks he can still make a go of Guvera, possibly via an Initial Public Offering on the Macedonian Stock Exchange of all places.
We know this because Herft last week announced that he’d persuaded two new people to join the board of the Guvera company, but one of those then immediately resigned after finding out about the Macedonian Stock Exchange plan, because of a potential conflict with other business interests he has in the East European country.[from http://ift.tt/2lvivLP]