Australian Securities and Investments Commission v Brite Advisors Pty Ltd

1. The Receivers would be acting properly and are justified in repaying to IBAU the amount owing under the Margin Loan from the Trust Assets and terminating any contractual arrangement associated with the Margin Loan.
2. Upon repayment of the Margin Loan, the following orders are discharged and of no ongoing effect:

(a) Orders 3 and 7 of the orders made in this matter on 5 June 2024; and

(b) Orders 17, 18 and 19 of the Distribution Orders.

1. The Receivers would be acting properly and are justified in making an interim distribution from the Trust Assets to Corporate Trustees and Beneficiaries, as contemplated by Order 24A of the Distribution Orders, in accordance with Orders 2 to 7 of the Distribution Orders and these orders.
2. To give effect to an interim distribution, which can take place before any application relating to the Retained Funds has been made, the Receivers are to take the following steps.

(a) With the advice and assistance of the Interim Funds Manager, identify the assets to be liquidated, which once liquidated will leave assets invested on the IB Platform with a value at or around the Non-Distributable Amount (Liquidation Assets).

(b) With the advice and assistance of the Interim Funds Manager, liquidate the Liquidation Assets, with such liquidation to occur within twenty-one business days of these orders (Liquidation Window).

(c) With the advice and assistance of the Interim Funds Manager, manage the currencies in which cash is held, during the Liquidation Window and as the liquidation occurs, to minimize foreign exchange risk and in contemplation of the target currencies for the interim distribution.

(d) With the advice and assistance of the Interim Funds Manager and where appropriate, as the Liquidation Assets are liquidated, adopt a hedging strategy to reduce the period during which the Liquidation Assets are not exposed to market risk.

(e) On the expiration of the Liquidation Window, the Receivers will commence all reasonable steps to distribute the proceeds of the liquidation of the Liquidation Assets (Interim Distributable Amount), with such steps to be completed within twenty business days (Distribution Window).

(f) At the start of the Distribution Window the Interim Distributable Amount will be valued on a single date, being the Interim Distribution Valuation Date, and in US dollars, applying prevailing exchange rates on that date as identified by the Receivers to the extent any cash is held in another currency. The total amount of pension withdrawals (or the USD equivalent calculated as at the date of each payment of such pension withdrawal) paid to Beneficiaries after 13 December 2023 will be added to this value (Interim Total Value).

(g) The interim distribution to be paid to a Corporate Trustee for the benefit of a Beneficiary, or direct to a Beneficiary, as applicable, will thereafter be calculated by reference to the formula in order 6. Where a Beneficiary has received a Withdrawal, this will be deducted from the amount to be distributed to them or to their Corporate Trustee.

(h) Orders 29 to 37 inclusive of the Distribution Orders apply to the Interim Distributable Amount in the same way as these orders apply to the Distributable Amount as defined in the Distribution Orders.

(i) Any amount of the Interim Distributable Amount continued to be held on trust in accordance with Order 32 of the Distribution Orders, will be held as cash in the IB Accounts.

(j) The Receivers have liberty to apply at short notice, including to seek Payment Orders. The Receivers are to prioritise Payment Orders in respect of Relay Group, Alltrust Services Limited, and STM Malta Pension Services Limited, being the Corporate Trustees who hold the largest amounts of Beneficiary entitlements.

(a) AUD$100,000,000 on account of potential Australian tax liabilities; plus

(b) USD$10,183,928 on account of potential US tax liabilities; plus

(c) GBP£4,418,636 on account of unresolved claims to Client AuM; plus

(d) USD$770,854 on account of unresolved claims to Client AuM; plus

(e) 10% of the value of the assets invested on the IB Platform once the amounts above have been excluded.

1. In respect of Beneficiaries whose Verified Entitlement includes an entitlement to the Deficient Mixed Fund, the Receivers can calculate the amount of their interim distribution relating to such assets (Beneficiary's Deficient Mixed Fund Interim Distribution) on a pari passu basis as follows.

BE (Beneficiary Entitlement) is the total value of an individual Beneficiary's Verified Entitlement relating to assets and cash which Brite Advisors held or purported to hold in the IB Accounts.

TE (Total Entitlements) is the sum of each and every BE.

TL (Total Loans) is the sum of each and every Loan.

Interim Total Value is the Interim Distributable Amount plus any pension withdrawals paid to Beneficiaries after 13 December 2023. The Interim Total Value is to be determined as at the Interim Distribution Valuation Date, as defined in order 4(f) above.

Withdrawals are post-appointment pension/hardship withdrawals paid to that Beneficiary. This represents a set-off against the Beneficiary's distribution.

Loans are any funds provided by Brite Advisors to that Beneficiary pursuant to a loan agreement and which have not been repaid. This represents a reduction of the Beneficiary's Verified Entitlement.

1. The Interim Distribution need not account for or deduct any liability for tax which the Receivers or Brite Advisors must pay or withhold, or has paid or withheld, on behalf of a Corporate Trustee or Beneficiary. The Receivers may deduct such taxes from a future distribution.
2. For the purpose of these orders, a business day means any day other than:

(a) a Saturday or Sunday; or

(b) a day that is a public holiday in Western Australia; or

(c) 24, 29, 30 or 31 December 2025; or

(d) 2 January 2026,

and includes days on which the Registry of the Federal Court in Western Australia is closed.

1. The Receivers may retain a lesser amount for Australian tax liabilities in order 5(a) above where:

(a) a private binding ruling has been received from the Commissioner of Taxation; and

(b) the Receivers have received written confirmation that the Commissioner of Taxation has no objections to retaining that lesser amount.

1. Order 31 of the orders dated 15 September 2025 relating to distribution methodology is amended to add after subparagraph (n) in that order:

"(o) Alltrust Services Limited (CRN 05365396);

(p) Bourse Pension Administrators (Malta) Limited (C66425)"

1. Order 34 of the orders dated 15 September 2025 relating to distribution methodology is amended to add a sentence at the end of that order:
2. "Where a Beneficiary has an account with Brite Advisors and has a trustee in place as part of a self-managed superannuation fund arrangement or similar arrangement, the Receivers are to make the distribution payment to the trustee nominated by that Beneficiary. The Receivers' ability to make that payment is not limited by Order 31."

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The history of this matter is set out in Australian Securities and Investments Commission v Brite Advisors Pty Ltd [2024] FCA 69 in which the Court ordered that Brite Advisors Pty Ltd be wound up on just and equitable grounds and appointed Liquidators. Receivers were also appointed over the property, assets and undertakings held by Brite Advisors on trust for others. Reference should be made to those reasons when considering these reasons.
2. The Receivers and the Liquidators are one and the same.
3. This is a complex and multi-jurisdictional Receivership. Brite Advisors operates within an extensive international corporate structure, comprising multiple affiliated entities incorporated across a range of countries. Through these entities, Brite Advisors has provided pension administration and investment management services to clients situated in a variety of legal and regulatory environments. Its' client base includes a mix of individuals and institutions, however the majority of its investors are corporate trustees or administrators of foreign pension schemes. A substantial number of investors also include Australian Self-Managed Superannuation Funds, in particular those with assets rolled over from United Kingdom pension arrangements. Collectively, these parties are referred to in the proceedings as the beneficiaries.
4. As part of providing services to the beneficiaries, Brite Advisors put in place a margin loan with Interactive Brokers Australia Pty Ltd. Brite Advisors also used IBAu for brokerage services and has a number of investment accounts with IBAu (IBAu platform).
5. On 15 September 2025, the Court ordered that the Receivers would be acting properly and are justified in adopting the approach set out in those orders in determining and making a distribution from the trust assets to corporate trustees or beneficiaries (Distribution Orders).
6. Pursuant to order 2 of the amended orders dated 15 September 2025, the Receivers seek orders that they would be acting properly and are justified in making an Interim Distribution as contemplated by the Distribution Orders.
7. The Receivers seek, in part, an order that they would be justified in repaying to IBAu the balance due under the margin loan from the proceeds of sale of assets which are under management by Brite Advisors and terminating any contractual arrangements with IBAu associated with the margin loan.
8. Contingent upon that happening the Receivers seek orders discharging orders 3 and 7 of the orders made on 5 June 2024 and orders 17, 18 and 19 of the Distribution Orders. Those orders provide:

A) 5 June 2024

3. On and from the making of these orders, the applicant:

1. agrees that the respondent is to retain cash in master accounts I5876295, I6075976 and I1246925 (and the sub-accounts associated with them) equal to the short cash balances in those accounts and in the currency of those accounts (where possible) or otherwise in another currency as at the date of this order plus an amount to cover projected interest charges and foreign exchange changes for the 24 months following the date of this order;
2. undertakes to the Court and to the respondent to maintain, and to instruct Mr Alexander to maintain, in account U3214940 securities with a value equivalent to not less than USD$20million from the date of this order until such further order of the court;
3. undertakes to the Court and to the respondent to provide prior written notice of any application to amend or lift the undertaking referred to in order 3.b above to the respondent;
4. undertakes to the Court and to the respondent that the respondent's compliance with these orders, and the trading to be undertaken by the defendant or its agent as contemplated in these orders, and the respondent's acceptance of the undertakings given by the applicant in these orders, does not:

   1. in any way prejudice any or all of the respondent's rights with respect to the Margin Loan or otherwise relating to or arising out of or in connection with its relationship with Brite Advisors, including without limitation any security interest or set-off rights it has over any assets affected by these orders; or

   2. amount to a concession or agreement by the respondent that it is not entitled to interest and dividend amounts earned on the Brite Assets whilst any short cash balance remains on any of the IBAU Accounts, nor does it constitute any waiver of any such entitlement, and that the applicant will not make any argument to the contrary.

...

1. On and from the making of these orders, within 15 business days of the end of each calendar month, the respondent will provide to the applicant a monthly report accounting for all interest earned on the long cash balances held in the IBAU Accounts and all interest accrued on the short cash balances held in the IBAU Accounts during that calendar month and on a gross basis (before any netting).

...

B) Distribution Orders

IB Margin Loan Security Assets

1. The Receivers will not distribute the cash held in the IB Accounts I5876295, I6075976, and I12469256 and will retain assets adequate to comply with the orders made in this matter dated 5 June 2024 (IB Margin Loan Security Assets).

2. Nothing in these orders affects the ongoing operation and effect of the agreements and undertakings recorded in order 3 of the orders made in this matter on 5 June 2024.

3. Until the determination of the Retained Funds as referred to in orders 20 and 21 below, and without limiting or affecting orders 17 and 18 above,

(a) the Receivers agree and undertake to the Court that nothing in these orders:

(i) has the effect of in any way prejudicing any of the rights of Interactive Brokers Australia Pty Ltd (IBA) with respect to the Margin Loan (as that term is defined in the orders made in this matter on 5 June 2024), IBA's contractual arrangements with the Defendant or the Receivers or otherwise relating to or arising out of or in connection with its relationship with Brite Advisors, including without limitation any security interest or set-off rights it has over any assets affected by these orders; or

(ii) amounts to a concession or agreement by IBA that it is not entitled to interest and dividend amounts earned on the Brite Assets whilst any short cash balance remains on any of the IB Accounts, nor does it constitute any waiver of any such entitlement, and the Receivers will not make any argument to the contrary; and

(b) IBA agrees and undertakes to the Court that nothing in these orders:

(i) has the effect of in any way prejudicing any of the rights of the Defendant or the Receivers with respect to the Margin Loan, the contractual arrangements with IBA, or otherwise relating to or arising out of or in connection with the relationship with IBA;

(ii) amounts to a concession or agreement by the Defendant or the Receivers that it is not entitled to challenge the right of IBA to interest and dividend amounts earned on the Brite Assets, and IBA will not make any argument to the contrary; and

(c) the Receivers agree and undertake to the Court that they will not transfer or cause to be transferred in specie assets held in the IB Accounts from IBA's trading platform to a third party trading platform without giving 14 days' notice to IBA.

1. IBAu opposes the making of the Interim Distribution orders without a sum of AUD$94.3 million being retained in the IBAu accounts on the basis that such an amount should be retained as security against any potential claim against it.
2. There is no doubt that this distribution, spanning as it does multiple corporate trustees, various currencies, pension schemes, and around 2000 direct beneficiaries, necessitates a structured court approved payment mechanism. The scale and complexity of this Interim Distribution cannot be underestimated.
3. On 13 November 2025, the Court heard argument and made orders approving an Interim Distribution following a liquidation of assets. From that amount, a non-distributable amount is to be retained. These are the reasons for those orders.

1. The Receivers propose to liquidate and distribute the Brite Advisors Client Assets under Management (AuM), excluding several specific reserves held back for tax and unresolved liability contingencies. These exclusions include:

(a) AUD $100 million reserved for potential Australian tax liabilities;

(b) USD $10,182,829 reserved for potential United States tax liabilities;

(c) GBP £4,418,636 in respect of unresolved claims related to Client AuM;

(d) USD $770,854 also relating to unresolved claims involving Client AuM; and

(e) an additional reserve equivalent to 10% of the nett value of assets invested on the IBAu platform, after exclusion of the aforementioned amounts.

1. The Receivers seek orders enabling the interim liquidation and distribution to occur within a defined window of 41 business days and seek payment orders to facilitate the distribution of approximately USD $638 million, representing the value of the liquidated assets referred to as the "Deficient Mixed Fund", as at 31 October 2025.

1. The orders sought by the Receivers will result in the margin loan with IBAu being paid out and closed and assets held on the IBAu platform being liquidated and distributed.
2. IBAu seeks that a sum in the order of USD$94.3 million be retained in the IBAu accounts on account of any potential liability of IBAu to the beneficiaries arising out of Brite Advisors making unauthorised transactions through the IBAu accounts.
3. As I understand the position, no details of any potential claim against IBAu have as yet been provided by the Receivers or Liquidators such that IBAu does not know what its potential liability is. In addressing the question of any potential liability of IBAu, the Receivers refer to any potential claim (which is not yet confirmed) as perhaps being one of knowing assistance in breach of a fiduciary duty within the meaning of the second limb in Barnes v Addy [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244.
4. During argument, counsel for IBAu raised the prospect of a claim at law rather than in equity, but it was not clear what form that claim might take. Nonetheless, I accept for the purposes of these reasons that there is a concern on the part of IBAu that a claim at law might be brought by the Liquidators.
5. As I have set out above, orders were made in this matter on 5 June 2024 relating to the retention in the defendant's accounts held on the IBAu platform sufficient to provide security to IBAu. At that time, the AuM on the IBAu platform were being managed by the interim funds manager approved by the Court on the application of the Receivers.
6. As I understand IBAu's contention, the contractual arrangements as between IBAu and Brite Advisors require sufficient funds to remain in the IBAu accounts by way of security with the quantum of that security being sufficient to indemnify it against any potential claim brought against IBAu.
7. A consideration of the contractual documents between IBAu and Brite Advisors annexed to the affidavit of Camilla Jane Kempthorne Clemente sworn 29 October 2025 (Clemente affidavit) reveals that security is limited to the trading arrangements which apply as between IBAu and Brite Advisors. That security is directed at securing performance of obligations and liabilities arising under the terms of the relevant contractual documents: see IBAu General Terms and Conditions, annexure CC-1 to the Clemente affidavit, cl 16.
8. Another contractual document between IBAu and Brite Advisors is titled "Intermediary Agreement: Omnibus Accounts". That document governs the relationships between IBAu and Brite Advisors by which IBAu provided services to Brite Advisors in the form of an electronic brokerage business so that Brite Advisors could provide services to its clients. Clause 16 provides for an indemnity by Brite Advisors in favour of IBAu from all loss and costs arising out of a number of specific events: annexure CC-2 to the Clemente affidavit. It does not extend to the claims in equity to which I have described above, nor does it apply to any claim for which IBAu may be liable at law.
9. A further document titled, "Custody Agreement" entered into between Brite Advisors and IBAu dated April 2023 provides at cl 17.1 that Brite Advisors' assets are subject to a security interest in favour of IBA to secure performance of Brite Advisors' contractual obligations to IBAu: annexure CC-4 to the Clemente affidavit.
10. The position advanced by IBAu that the contractual documents governing the margin loan covers any potential claim by the liquidators of Brite Advisors for unauthorised transactions on the part of Brite Advisors is not apparent on the contractual suite of documents to which I have referred and is unsustainable.
11. There are other contractual documents, in addition to the principal documents I have described above, but they do not affect the position between IBAu and Brite Advisors insofar as the purpose of security is concerned.
12. Apart from the construction pressed by IBAu not being open on the text of the contractual documents, there are at least three further reasons why such a construction is not open.
13. First, the margin loan with IBAu is to be closed and the assets on the IBAu platform liquidated. There is no need for further contractual security.
14. Second, if IBAu's contentions are accepted, no party, whether Brite Advisors or otherwise, would be able to close its margin loan account and withdraw or transfer cash or assets held on the IBAu platform. That is because on IBAu's argument, it can insist on an amount being retained in the accounts on the IBAu platform for a period of not less than the applicable limitation period for any potential claim being made against it, irrespective of whether any potential claim exists or might be available.
15. Third, IBAu's argument has the effect that any unauthorised transactions by Brite Advisors, for whom IBAu may be liable - and as I have noted, a potential claim, at least at this point, is one of knowing assistance in breach of a fiduciary duty by Brite Advisors - is to be secured by the funds of the very beneficiaries whose funds may be the subject of unauthorised transactions. That is so, notwithstanding that under the second limb of Barnes v Addy for a knowing assistance claim, IBAu will have assisted Brite Advisors in a dishonest and fraudulent design with knowledge ascertained in accordance with the four categories of knowledge identified in Baden v Société Générale pour Favoriser le Developpement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509.
16. If such a claim as that postulated is initiated, IBAu is either liable, or it is not. If it is, it is an absurdity for beneficiaries, whose funds were the subject of a breach of a fiduciary duty by Brite Advisors in which IBAu knowingly assisted, to be required to provide security for IBAu's own accessorial liability.
17. If not liable, then there is no need for security.
18. The same considerations apply to any potential claim at law.
19. As to the costs of any potential claim, the litigation will need to be funded. If proceedings are instituted, IBAu is able to make an application for security for costs, with such application to be considered according to established principles, and funds to secure the costs of litigation should not be withheld at this point.

1. It is for these reasons that I made the interim distribution orders without requiring a specific amount to be retained on the IBAu platform as security for any potential liability to the beneficiaries.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan.