Australian Securities and Investments Commission v Camelot Derivatives Pty Limited

Counsel for the First Defendant: The First Defendant did not appear

Solicitor for the Defendants: Irlicht & Broberg

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1705 of 2010

IN THE MATTER OF CAMELOT DERIVATIVES PTY LIMITED (In Liquidation) (ACN 086 300 950) BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

AND: CAMELOT DERIVATIVES PTY LIMITED (IN LIQUIDATION)

JUDGE: FOSTER J DATE OF ORDER: 23 APRIL 2012 WHERE MADE: SYDNEY

Definitions The following definitions apply in these Consent Orders: (a) ASIC Act means the Australian Securities and Investments Commission Act 2001 (Cth). (b) Corporations Act means the Corporations Act 2001 (Cth). (c) Camelot means the First Defendant, Camelot Derivatives Pty Ltd (In Liquidation) (ACN 086 300 950). (d) Financial Services has the meaning given to that term in the Corporations Act (e) Mr King means the Second Defendant, Neil William King.

BY CONSENT OF THE PLAINTIFF AND THE SECOND DEFENDANT, THE COURT DECLARES THAT: Misleading or deceptive conduct 1. By making the statements set out in Annexure A to these Orders, Mr King, on behalf of Camelot, represented that clients of Camelot had earned significant returns from options trading. 2. By making the statements set out in Annexure B to these Orders, Mr King, on behalf of Camelot, represented that potential clients of Camelot could expect to earn significant returns from options trading. 3. By making the statements set out in Annexure C to these Orders, Mr King, on behalf of Camelot, represented that Camelot had experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market. 4. By making the statements set out in Annexure D to these Orders, Mr King, on behalf of Camelot, represented that Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market. 5. By making the representations set out in Orders 1 to 4 above, the defendants engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act. Mr King's Accessorial Liability for Camelot's Misleading and Deceptive Conduct 6. Mr King, as Managing Director of Camelot, caused Camelot to make the representations set out in Orders 1 to 4 above, knowing that those representations were misleading or deceptive, or likely to mislead or deceive, and that Camelot would be engaging in contraventions of s 1041H of the Corporations Act and s 12DA of the ASIC Act. 7. By reason of the matters set out in Order 6 above, Mr King, within the meaning of s 1324 of the Corporations Act: (a) aided, abetted, counselled or procured; and (b) was knowingly concerned in, or party to, misleading or deceptive conduct engaged in by Camelot in contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act. Failure to conduct financial services business fairly, efficiently and honestly 8. During the period between March 2008 and October 2010, Camelot engaged in an options trading strategy on behalf of clients in circumstances where it knew or ought to have reasonably known that it was furthering Camelot's interests in earning commissions and not acting in the interests of its clients. 9. By reason of the matters set out in Order 8 above, Camelot failed to do all things necessary to ensure that the financial services provided by Camelot as covered by Australian Financial Services Licence Number 277719 (AFSL) were provided efficiently, honestly and fairly in contravention of s 912A(1)(a) of the Corporations Act. 10. Mr King, as Managing Director of Camelot, caused Camelot to engage in the conduct set out in Order 8 above in contravention of s 912A(1)(a) of the Corporations Act, knowing that Camelot would thereby fail to do all things necessary to ensure that the financial services provided by Camelot as covered by the AFSL were provided efficiently, honestly and fairly. 11. By reason of the matters set out in Orders 8 to 10 above, Mr King, within the meaning of s 1324 of the Corporations Act: (a) aided, abetted, counselled or procured; and (b) was knowingly concerned in, or party to, a failure by Camelot to do all things necessary to ensure that the financial services provided by it as covered by the AFSL were provided efficiently, honestly and fairly in contravention of s 912A(1)(a) of the Corporations Act.

AND BY CONSENT OF THE PLAINTIFF AND THE SECOND DEFENDANT, THE COURT ORDERS THAT: 12. Mr King be restrained for a period of six (6) years commencing on 23 April 2012 from providing, directly or indirectly, any financial services. 13. Further, Mr King be restrained for a period of two (2) years commencing on 23 April 2012 from directly or indirectly making any representation (whether orally or in writing) in trade or commerce that, or to the effect (whether expressly or by implication) that: (a) Camelot's clients have generated significant returns by investing in an options trading market; (b) Camelot's clients could generate, or have an expectation of generating, significant returns by investing in an options trading market; (c) Camelot has experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market; or (d) Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market. 14. Further, Camelot and Mr King be restrained for a period of two (2) years commencing on 23 April 2012, whether by their servants or agents or otherwise, from directly or indirectly soliciting or enticing any person to invest in an options trading market on the advice or recommendation of Camelot and Mr King or either of them. 15. Paragraphs 2 to 11 of the orders made by the Court on 3 June 2011 continue until 5.00 pm on 30 June 2012 at which time they are to be dissolved automatically by operation of this order except that those orders shall not prevent Camelot Capital Pty Limited from making a payment of $375,000 to the liquidator of Camelot. 16. There be no orders as to costs. 17. The exhibits be returned to the solicitor for the plaintiff. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A Representations that clients of Camelot had earned significant returns from options trading 1. Camelot had been generating high income returns for clients on a monthly basis within an acceptable risk to reward profile. 2. On average, client accounts had increased by 150% during 2008. 3. In August 2009, Camelot's clients made returns of up to 76%. 4. Camelot's clients make considerable returns and much more than trading in ordinary shares. 5. Returns of 2% to 6% per month were probable based upon previous history. 6. Camelot's clients were generating anywhere between a 10% and 50% per annum return of consistent income generations. 7. Camelot's clients' returns had been potentially anywhere between 10% and 50% a year of income generation and some of them had reinvested their money. 8. Camelot's clients were thanking Mr King for the thousands of dollars they had made as a result of their investments. 9. There was no other income trading strategy that had the potential probability of a 76.5% success rate and actually delivered income into client's bank account every single month. 10. The average win:loss ratio was 80% wins to 20% losses. 11. In trying times during October 2008, many of Camelot's trading clients achieved 40% to 100% on capital employed. 12. In trying times in April 2009, many trading clients achieved notable results. 13. Clients that had taken Camelot's recommendations had enjoyed cash returns of 76% for the month of August 2009. 14. The average expected win for any given option trade was 2% to7% of the capital employed in the trade. 15. Mr King had proven and tested concepts that he had used to help clients make anywhere from 10% to 50% a year of consistent income generation. 16. Camelot's clients were generating anywhere between 10% and 50% per annum return of consistent income generation. 17. Client returns were potentially anywhere between 10% to 50% of consistent income generation. 18. The average client had received 150% return on investment for 2008. ANNEXURE B Representations that potential clients of Camelot could expect to earn significant returns from options trading 1. Camelot clients can expect from 2% to 10% per month clear profit, with a 76.5% chance of success. 2. Clients enjoy a 76.5% chance of success. 3. Returns of 2% to 6% per month were probable based upon previous history and larger returns may be achieved at times. 4. Returns of 2% to 6% per month net of costs are probable. 5. The potential income return on accounts is 100% to 200% of capital invested on a yearly basis. 6. Camelot's clients make considerable returns and much more than trading in ordinary shares. 7. Camelot's clients can profit in both rising and falling markets. 8. Returns of 2% to 6% per month were probable based upon previous history. 9. Clients could earn superior returns in a high risk market using Camelot's time-tested risk management method. 10. Camelot had the potential to make money regardless of the direction the markets are headed. 11. Clients had a potential for high returns as obtained by large financial institutions. 12. Clients had the potential to receive higher returns than for example investment in a managed fund. 13. Clients could have a 4 out of 5 chance of picking a winner. 14. Clients had the potential to generate consistent income with income to spend month to month from their own trading. 15. The potential returns from options trading were 10% to 50% a year. 16. Depending on client's success and risks taken, on an individual basis clients generally have an expectation of up to 30% to 60% annual income per year. 17. Depending on client's success and risks taken, on an individual basis clients generally have an expectation of up to 100% to 200% annual income per year. 18. For the risks taken, income from option trading can potentially vary up to 10% to 50% per year. 19. For the risks taken, income from option trading can potentially vary up to 100% to 200% per year. 20. Clients could earn potentially high passive income on a month to month basis with the potential to earn up to 10% to 50% annualised in 2008. 21. Clients could earn potentially high passive income on a month to month basis with the potential to earn up to 100% to 200% annualised in 2008. 22. The average expected win for any given option trade was 2% to 7% of the capital employed in the trade. 23. Camelot's expectation for annual return is 10% to 50% of capital invested per year. 24. Camelot's expectation for annual return is 100% to 200% of capital invested per year. 25. Camelot's and Mr King's trading could generate a high level of consistent passive income. 26. There was no other income trading strategy that had the potential probability of a 76.5% success rate and actually delivered income into client's bank account every single month. 27. The average return may be 2% to 7% of the capital employed in the trade where the option expired worthless. 28. The average win:loss ratio was 80% wins to 20% losses. 29. Camelot could generate a consistent passive income return for clients. 30. Client returns were potentially anywhere between 10% to 50% of consistent income generation. 31. The tested trader assisted options trading system gives clients 76.5% odds of picking a winner. ANNEXURE C Representations that Camelot had experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market 1. Potential clients could earn superior returns in a high risk market using Camelot's time-tested risk management method. 2. Potential clients could have their trading account managed exclusively by a professional management team that made money whilst they slept. 3. Mr King had been trading options for 18 years as a professional dealer and to retail and wholesale clients for the past 12 years and had an ability to trade options with a focus on risk management and a specialised approach to option trading which sought to generate income for clients. 4. Clients would have access to experience in a highly specialised area including experience in efficiently entering and exiting trades when appropriate. 5. Clients could not possibly know the consistent additional income they could earn through options trading without speaking to Camelot. 6. Camelot and Mr King could get significant returns for investors whilst minimising the risks involved. 7. Using the assistance of Camelot would allow potential clients to get on and enjoy life with the knowledge that somebody had assisted them in managing their risk and access to opportunity at all times. 8. When trading options through Camelot, clients could be confident that a professional trader would advise them to constantly monitor the markets and seek opportunities to trade options for profit within their accounts. 9. Camelot and Mr King were experienced option traders who could extract more profit from the same trade than an inexperienced trader. 10. Camelot had an exclusive way to generate small but consistent passive income returns with an acceptable medium to high level risk to reward profile. 11. Camelot had a professional non-discretionary trader who created option income for clients as well as managing their risk, which was an exclusive way to create a high rate of cashflow from your low yielding capital. 12. Mr King's options trading system gave clients a 76.5% chance of picking a winner. 13. Camelot had a time-tested risk management strategy that clients could actually access, which provided the potential for high returns. 14. It had taken Camelot a lot of years and a lot of time to develop a means by which clients were generating anywhere between 10% and 50% per annum return of consistent income generation. 15. Camelot and Mr King had applied their experience to help clients generate anywhere between a 10% and 50% per annum return of consistent income generation. 16. The reason why Camelot's client's returns were potentially anywhere between 10% to 50% of consistent income generation was because the proven and tested trader assisted options trading system that gave clients 76.5% odds of picking a winner. 17. The investment which gave Camelot's client returns of potentially anywhere between 10% and 50% a year of consistent income generation was based on a tested and proven system Mr King had been using for over 18 years. 18. Options trading for income was the only way of which Mr King was aware that had a proven track record of generating exceptional returns for clients as investors. 19. Investors could be confident that trading opportunities and risk management were being managed by the professional resources of Camelot. ANNEXURE D Representations that Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market In addition to all the representations contained in Annexure C, the following further representations are relied upon: 1. Mr King had proven and tested concepts that he had used to help clients make anywhere from 10% to 50% a year of consistent income generation. 2. Clients would have an advantage by using Mr King as he could achieve the results they desired by reason of his success and expertise. 3. A professional trader would assist clients to trade their accounts and manage the associated risks. 4. Camelot would assist clients to derive maximum profit for the trading opportunities that are available. 5. A professional trader would be assisting clients to generate option income. 6. Clients would be in the safest possible hands when engaging Camelot to assist them in generating income via options trading.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1705 of 2010

IN THE MATTER OF CAMELOT DERIVATIVES PTY LIMITED (In Liquidation) (ACN 086 300 950) BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

AND: CAMELOT DERIVATIVES PTY LIMITED (IN LIQUIDATION)

JUDGE: FOSTER J DATE: 23 APRIL 2012 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The first defendant, Camelot Derivatives Pty Limited (In Liquidation) (Camelot), was incorporated on 16 February 1999. It is a wholly-owned subsidiary of Camelot Capital Pty Limited (Camelot Capital). On 18 April 2011, Camelot went into voluntary liquidation. On 23 September 2011, Jacobson J ordered that the plaintiff, Australian Securities and Investments Commission (ASIC), have leave to continue these proceedings against Camelot on condition that it takes no steps to enforce against Camelot any order for the payment of money without the further leave of the Court. 2 The second defendant, Neil William King (Mr King), was at all material times the sole director and secretary of Camelot. Mr King is also the sole director, secretary and shareholder of Camelot Capital. He controls both Camelot Capital and Camelot. 3 Camelot was established as the corporate trading vehicle for Mr King. 4 From 24 November 2004 until 28 July 2011, Camelot was the holder of an Australian Financial Services Licence (No 277719) (AFSL). Mr King was the only person designated as the responsible person for the purposes of Camelot's AFSL. 5 Camelot's AFSL provided that Camelot was authorised (inter alia) to provide financial product advice for certain classes of financial products, including derivatives. 6 During the period from March 2008 to October 2010 (the relevant period), the primary business conducted by Camelot was advising, recommending and engaging in options trading investments on behalf of clients. During the relevant period, the recommendations made by Camelot and the options trading engaged in by Camelot, on behalf of clients, were promoted by Camelot as being based upon a strategy known as a "condor" or an "iron condor" in respect of options available for trading on the FTSE 100 exchange. Camelot promoted its activities and sought to procure clients through public seminars conducted by Mr King, through its website and through marketing documents. 7 At the public seminars, Mr King made representations to attendees in an endeavour to persuade those attendees to become clients of Camelot. The public seminars conducted by Mr King were the primary source of clients for Camelot. 8 The Camelot website published information to those who accessed it. By means of its website, Camelot invited potential clients to register their interest in receiving further information concerning Camelot's options trading activities. Representations were also made by Camelot via its website. 9 During the relevant period, Camelot also invited selected potential clients who had registered their interest at public seminars or via the Camelot website to attend private presentations at Camelot's offices. These presentations were also conducted by Mr King. At these presentations, Mr King also made representations to the attendees. 10 Clients of Camelot suffered significant losses as a result of Camelot's trading activities during the relevant period. Those clients complained to Financial Ombudsman Service Limited and to ASIC. In the period from September 2009 to December 2010, ASIC served several notices upon Camelot and upon other entities with whom Camelot had had dealings requiring the recipients of those notices to produce documents and to provide information to ASIC. 11 In July 2010, ASIC conducted examinations pursuant to s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). 12 On 7 December 2010, ASIC commenced the present proceeding. 13 In its Originating Application, ASIC sought a declaration that both Camelot and Mr King had engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, in contravention of s 1041H of the Corporations Act 2001 (Cth) (the Corporations Act) and in contravention of s 12DA of the ASIC Act. The essence of ASIC's complaint was that Camelot and Mr King had made a number of false or misleading misrepresentations at the seminars and presentations conducted by Mr King, on Camelot's website and in promotional material provided to prospective clients. ASIC also sought a declaration that both Camelot and Mr King had failed to do all things necessary to ensure that the financial services provided by them covered by Camelot's AFSL were provided efficiently, honestly and fairly and therefore had contravened s 912A(1)(a) of the Corporations Act. ASIC also sought a declaration that both Camelot and Mr King had failed to comply with the conditions of Camelot's AFSL. Alternatively, ASIC alleged that Mr King was liable as an accessory in respect of Camelot's contravening conduct. 14 In addition, ASIC sought interlocutory and final injunctive relief. It also claimed ancillary relief pursuant to s 12GLA(2)(c) of the ASIC Act. 15 The Court granted temporary interlocutory relief on 4 February 2011 and again on 11 May 2011. On 3 June 2011, the Court made further interlocutory orders, by consent. Those orders are attached to these Reasons for Judgment as Attachment "A". 16 The final hearing of this proceeding was fixed to commence before me on Monday last, 16 April 2012. Late on Friday, 13 April 2012, I was informed that the matter had been settled. 17 When the matter was called on before me on Monday last, Counsel for ASIC handed up to me Short Minutes of Order dated 16 April 2012 signed by the solicitor for ASIC and by Counsel for Mr King (the Consent Orders). The Consent Orders record the settlement of this proceeding as between ASIC and Mr King. Counsel for ASIC also informed me that the liquidator of Camelot neither opposed nor consented to the declarations recorded in paragraphs 1 to 5 of the Consent Orders or to the Orders recorded in paragraphs 6 to 14 of those orders. The liquidator did consent to the orders recorded in paragraphs 15 and 16 of the Consent Orders. 18 After hearing submissions from Counsel, I indicated to the legal representatives of ASIC and of Mr King that I was disposed to make the declarations and orders which give effect to their settlement. 19 Having reflected on the matter, I propose to make the declarations and orders substantially in the form agreed between ASIC and Mr King. I will now provide brief reasons for doing so.

The Conduct of Camelot and Mr King 20 The substance of ASIC's case that Camelot and Mr King had engaged in misleading and deceptive conduct and thus contravened s 1041H of the Corporations Act and s 12DA of the ASIC Act was that Camelot and Mr King had represented to potential clients that: (a) Camelot's clients had generated significant returns by investing in an options trading market; (b) Camelot's clients could generate, or have an expectation of generating, significant returns by investing in an options trading market; (c) Camelot had experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market; and (d) Camelot was able to show potential clients how they could achieve significant returns by investing in an options trading market which representations were false or, at least, misleading or deceptive or made without either Camelot or Mr King having any reasonable basis for making them. 21 ASIC's case was that these representations necessarily arose or are to be inferred or implied from express statements made by Mr King at public seminars and at private presentations conducted by him, from the material available to those who accessed Camelot's website, from Camelot's advertising and from Camelot's promotional materials. 22 On 13 March 2012, I ordered ASIC to specify in writing for the benefit of Camelot and Mr King, and in order to assist the Court, the findings of primary and conclusionary facts for which it would contend at the final hearing and the propositions of law upon which it intended to rely at that hearing supported as necessary by appropriate references to authority. At the same time, I ordered Camelot and Mr King to specify in writing with particularity which facts specified by ASIC in response to my orders were disputed and which propositions of law advanced by ASIC were disputed. I also ordered Camelot and Mr King to specify any additional facts which they, or either or them, intended to prove at the final hearing and also to specify any additional propositions of law upon which they, or either of them, intended to rely at that hearing. 23 On 29 March 2012, ASIC filed and served its Outline of Opening Submissions (ASIC's Submissions) in which it set out in considerable detail the findings of fact which it sought from the Court and the propositions of law upon which it intended to rely. The findings of fact set out in ASIC's Submissions were supported by detailed references to the evidence to be tendered by ASIC. The propositions of law advanced by ASIC were supported by appropriate references to authority. Annexed to ASIC's Submissions as Annexures "A", "B" and "C" respectively were lists of statements made by Camelot and Mr King which ASIC contended constituted a proper basis for the Court to find that the representations noted at subparagraphs (a) to (d) of [20] above had in fact been made by Camelot and by Mr King. 24 Prior to the hearing, the liquidator of Camelot and the solicitor for Mr King informed ASIC that no documents would be filed or served in compliance with the defendants' obligations under the orders made by me on 13 March 2012 to answer specifically the factual and legal contentions made by ASIC in its Submissions. Further, neither the liquidator of Camelot nor Mr King notified any objection to any of the evidence intended to be adduced at the final hearing by ASIC. Both of those parties were required to notify all objections to ASIC's evidence by 11 April 2012. 25 When the matter was called on before me on 16 April 2012, ASIC appeared and was represented by Counsel. Mr King also appeared and was represented by Counsel. There was no appearance either by or on behalf of the liquidator of Camelot although I was satisfied that he was aware that the final hearing was fixed to commence on that day and that ASIC intended to seek limited final injunctive relief against Camelot. 26 At the hearing before me on 16 April 2012, I admitted into evidence without objection all of ASIC's evidence. 27 At the hearing, Counsel for Mr King informed me that: (a) Mr King had nothing to put against the contentions of fact and law advanced by ASIC in its Submissions; (b) In his submission, the contentions of fact advanced by ASIC were made out by ASIC's evidence; and (c) Mr King consented to the declarations and orders set out in the Consent Orders. 28 In those circumstances, I propose to extract from ASIC's Submissions and set out below those findings of fact which I am prepared to make to which I consider I should refer in these Reasons for Judgment in support of the declarations and orders which ASIC and Mr King have asked me to make. I will indicate in each case the paragraph from ASIC's Submissions at which each particular finding or group of findings may be found. 29 I am satisfied that, having regard to the evidence tendered by ASIC, to the form of the Consent Orders and to Mr King's attitude to ASIC's Submissions as conveyed to me, I should make the findings of fact sought by ASIC and I do so.

Camelot Marketing Documents: 'Condor' strategy and services provided to clients (a) During the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, disclosed to potential and actual clients that the options trading strategy engaged in by Camelot on behalf of clients was a 'Condor' strategy, or more precisely, a 'sold Iron Condor' strategy. ([25]) (b) During the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, informed potential and actual clients that, in executing its options trading strategy on behalf of clients, it provided the following services to its clients: (1) Monitoring of options markets by a professional options trader for the purpose of seeking and identifying opportunities to trade options for profit on behalf of clients; (2) The selecting and making of options trading recommendations to clients by a professional options trader, for the purpose of making profits for clients; (3) Monitoring and management of client trading accounts for the purpose of making trading recommendations to manage the risk to clients of open trading positions. ([26]) (c) The matters set out in the preceding two paragraphs were also stated to potential clients during private seminars referred to in paragraph 21 above. ([27])

Camelot Marketing Documents: Representations as to how Camelot's 'Condor' Strategy would be implemented (d) … during the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, represented to potential and actual clients that: (1) Camelot's 'Condor' strategy included using the income stream from premiums for short-dated (4 weeks to expiry) options to purchase longer-dated options (with a different expiry date); (2) In the usual course of executing the 'Condor' strategy by Camelot on behalf of clients, there would be 1 or 2 trades per month; (3) In the usual course of executing the 'Condor' strategy by Camelot on behalf of clients, the majority of trades would expire worthless. ([28])

Camelot Marketing Documents: Representations to Clients as to Returns

Representations that Camelot's clients have generated significant returns by investing in an options trading market (e) ... during the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, represented to potential and actual clients that Camelot's clients have generated significant returns by investing in an options trading market: See Annexure A. ([29])

Representations that Camelot's clients could generate, or have an expectation of generating, significant returns by investing in an options trading market (f) … during the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, represented to potential and actual clients that Camelot's clients could generate, or have an expectation of generating, significant returns by investing in an options trading market: See Annexure B. ([30])

Representations that Camelot has experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market (g) … during the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, represented to potential and actual clients that Camelot has experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market: See Annexure C. ([31])

Representations that Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market (h) … during the period from March 2008 to October 2010, Camelot, through the Camelot Marketing Documents, represented to potential and actual clients that Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market: See Annexure D. ([32])

Camelot Trading Platform and Client Accounts (i) At all material times, Camelot maintained an arrangement with a professional brokerage company, for the purposes of that company executing the trades recommended by Camelot, on behalf of Camelot's clients, through separate client accounts held and maintained by that company. ([33]) (j) During the period from March 2008 to October 2010, Camelot required that clients entered into trading agreements with Camelot and a separate agreement with the brokerage company, for the purposes set out in the preceding paragraph. ([34]) (k) Camelot clients were provided with a Product Disclosure Statement. ([35]) (l) The features of the arrangements entered into by clients of Camelot with Camelot and the brokerage company included that the minimum investment amount was $50,000. ([36]) (m) At all material times, the commission/brokerage fee on each individual option trade, charged by Camelot to clients, including the amount payable to the brokerage company, in respect of options traded on the FTSE 100 exchange, was GBP20 per option trade. Further, the amount of the commission/brokerage retained by Camelot was between GBP17.00 (85%) and GBP17.60 (88%) per option trade. ([37])

Options Trading: Iron Condor Strategy (n) A 'Condor' or 'Iron Condor' options trading strategy is explained in an Options Industry Council presentation, entitled "Trading Credit Spreads and The Iron Condor", and in Natenberg, S. Option Volatility and Pricing, (McGraw Hill, 1994), Ch 8, p158. The key features of a 'sold Iron Condor' strategy can be summarised as follows: (1) The construction of an Iron Condor involves the creation of two credit spreads, one above where the underlying market is trading (call credit spread), and one below where the underlying market is trading (put credit spread). (2) A credit spread involves the sale of an option (put or call), and the simultaneous purchase of another option (put or call respectively), that is farther out of the money. The difference between the premiums received for the sold option and the cost of the purchased option provides the maximum total premium received for each credit spread, and therefore the maximum profit obtainable from the Iron Condor strategy is the total premiums received for both the call credit spread and the put credit spread. (3) The risk arising from the sold options position is mitigated by the bought options positions. The bought options are less expensive than the sold options, because their strikes are further out of the money than the sold options. The net premium income or profit is realized by either: i. keeping the position until the options expire either worthless (that is, on expiry they are "out of the money"), or within the Reverse Break Even points ("RBE") calculated for the strategy; or ii. later buying back one or both credit spreads at a lower net cost than the net premium received to set up the spread. (4) The Iron Condor, in effect, creates a trading range that is bounded by the strike prices of the two sold options: i. If the underlying market closes between these two strikes at expiry, then the entire net premium is retained. This is the maximum profit potential of the strategy, which is known and calculated up front. ii. Some profit is retained if, at expiry, the underlying market rises above the sold call strike price or falls below the sold put strike price, but remains within the RBE points. iii. Between the RBE points and the bought call or put strike prices, losses occur, which can be substantial. iv. The maximum potential loss at expiry will occur if the underlying rises above the bought call strike price, or below the bought put strike price. v. One of the credit spreads will always expire worthless. (5) The strategy is regarded as a passive strategy, meaning that ideally, the options positions will be left to expire worthless and therefore without the need for further risk management trades (i.e. purchasing of further options to protect against capital loss). This strategy is regarded as passive because the amount of net premium that is earned is relatively small and consequently the potential profitability of the strategy is very sensitive to transaction costs. If too many trades are executed, and therefore the options are not able to be left to expire worthless, any premium earned on the initial strategy can quickly be eaten up by the additional transaction costs inherent in these further trades. ([38]) (o) For present purposes, the features of a Condor trading strategy include that: (1) ideally the option positions are left to expire worthless without the need for further risk management trades; (2) the amount of net premium earned is relatively small; and (3) the potential profitability of the strategy is, consequently, very sensitive to transaction costs, such as commission/brokerage. ([39])

The Camelot 'Condor' as represented in the Camelot Marketing Documents (p) The Camelot Marketing Documents recommended combining a sold Iron Condor with some additional longer dated bought calls and/or puts. The key factor in this recommended strategy is that the additional bought calls and/or puts have a later expiry than the options used to establish the sold Iron Condor. ([40]) (q) The essential feature of the sold Iron Condor, bought puts and call strategy promoted by Camelot was to establish a sold Iron Condor and use the proceeds from the sale of the Iron Condor to fund the purchase of additional puts and/or calls that have a longer time to expiry than the options used to create the condor. A feature of this strategy is the difference in expiry date between the sold Iron Condor and the additional puts or calls that are purchased. ([41]) (r) In circumstances where the additional puts purchased were to have the same expiry as the sold Iron Condor, the two parts of the strategy would have conflicting objectives. ([42]) (s) The risk of the strategy, in addition to the usual risks engaged in Iron Condor trading, arises because the strategy involves using the short Iron Condor proceeds to purchase some longer dated (later expiry) puts and/or calls. In order for the trade to be profitable, the market must present a window of opportunity to profit from the longer dated, bought calls and/or puts. ([43])

The Camelot 'Condor' in practice (t) Contrary to the representations made to clients in the Camelot Marketing Documents as to how the Camelot 'condor' strategy would be implemented: (1) Camelot's 'Condor' strategy implemented on behalf of clients primarily involved additional put or call trades with the same expiry date; (2) Camelot's 'Condor' strategy implemented on behalf of clients usually involved far greater than 1 or 2 trades per month; (3) Camelot's 'Condor' strategy implemented on behalf of clients usually involved the majority of trades not expiring worthless. ([44]) (u) The trading engaged in by Camelot was not consistent with the strategies it had promoted: (1) The only strategy used by Camelot on behalf of Mr Fagg and Mr Poplawski was the sold Iron Condor accompanied by additional bought put and/or call options for the same expiry as the Condor, and this same strategy was the predominant strategy used by Camelot on behalf of Mr Hunter and Mr Wilhelm; (2) The trading strategy engaged by Camelot in relation to these four clients was similar to the strategy which it had promoted, but with one very important distinction being that the additional puts and/or calls had the same expiry dates as the original Iron Condor and not longer dated expiries. ([45]) (v) The trading predominantly engaged in by Camelot neutralised profits because the additional bought puts and calls had the same expiry dates as the original sold Iron Condor and, as a result, there was no window of opportunity to profit from the additional calls and puts purchased because all the options expired at the same time and had conflicting profit objectives. ([46]) (w) The essential problem with selling an Iron Condor and then buying puts and calls with the same expiry as the Condor is that Camelot was entering into two different strategies at the same time but with completely opposite "pay off profiles". ([47]) (x) It follows that the end result of this strategy is that one of the strategies will make a profit, but the other strategy will make a loss effectively neutralising the overall result and/or requiring extensive risk management trades. ([48])

Conclusions on the Camelot commission structure (y) The commission structure that Camelot implemented was "completely inappropriate for any Condor based trading strategy". ([49]) (z) This is because of the impact of transactional costs upon Condor trading: (1) Iron Condors are a four legged strategy that require a low transaction costs platform to be traded successfully; (2) A high commission structure greatly reduces returns and often makes risk management trades very marginal; (3) If an Iron Condor trading strategy is undertaken on a high commission to a contract trading platform, the resulting commission charges eat into the maximum potential profit to the point where the investor is no longer being adequately rewarded for the risk of the trade; (4) The costs of trading will outweigh the risk adjustment returns, and losses will usually occur. ([50]) (aa) An institutional options advisor would charge a commission rate in the range of 1% of an options premium. Such a commission structure ensures that the commission on any given option contract would never increase the cost, or lessen the proceeds from sale, by more than 1%. ([51]) (ab) The inappropriateness of the commission structure for the implemented strategies was exacerbated by the fact that Camelot recommended and implemented selling Iron Condors that were quite wide, in that the spreads that were sold were quite a long way "out of the money". As there is less risk attached to selling out of the money spreads relative to at the money spread, the premiums received from selling these out of the money spreads are less than the premiums received from selling at the money spreads. ([52]) (ac) This meant that for an investor who trades on a fixed rate of commission per contract (as was the case with Camelot), the percentage of received premium that was eroded by commissions is much higher for a sold out of the money spread than it is for a sold at the money spread. ([53]) (ad) In addition to the above, risk management trades were often required and the costs associated with those trades had to be assessed when considering each trade. Where a risk management trade was required, the impact of commissions was doubled. ([54]) (ae) A trading platform that involves a fixed commission per contract traded is not ideal for any type of multi-legged, spread based trading strategy. Out of the money spread based strategies are disproportionally disadvantaged by a fixed cost per contract commission structure. The end result is that the maximum possible after costs return is greatly eroded, to the point where the investor is unlikely to be rewarded for the risk inherent in the trade. ([55]) (af) Camelot should have been aware that the sold Iron Condors being recommended were wide (further out of the money) and that the fixed commission charges per contract traded would reduce the potential after cost returns to clients. ([56]) (ag) The required annual return necessary to cover the commissions was extremely high, and Camelot does not appear to have considered the effects of commission on the client's bottom line. ([57]) (ah) Further, the multi-legged nature of the strategies gave rise to commission charges that were so high that it was extremely unlikely that after cost returns generated by the trading strategies would provide acceptable risk adjusted returns. ([58]) (ai) In conclusion, the trades recommended and implemented by Camelot were not consistent with generating returns for clients, protecting the investments made by clients or managing the risk of trading for clients. ([59]) …

Factual Conclusions regarding Representations made in Camelot Marketing Documents (aj) It follows that during the period from March 2008 to October 2010: (1) clients of Camelot had not earned significant returns from options trading; (2) Camelot did not have reasonable grounds for believing that potential clients of Camelot could expect to earn significant returns from options trading; (3) Camelot did not have experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market; and (4) Camelot did not have reasonable grounds for believing that Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market. ([64])

Mr King and the Operations of the Camelot Business (ak) Camelot was established as the corporate trading vehicle for Mr King. ([65]) (al) Mr King was the only person designated as the "Responsible Person" for the purposes of Camelot's AFSL. ([66]) (am) Mr King was the creator and proponent of the options trading strategy developed by Camelot to be conducted on behalf of clients. ([67]) (an) As Camelot was a small company, Mr King closely supervised the operations of the Camelot business. ([68]) (ao) From mid-2008, only 4 people were employed by Camelot: Mr King, Mrs Donna King (Mr King's wife), Mr Michael Lauterstein and Mr James Titlow, and - (1) Mr King was described as having "been trading options for 18 years and as a professional dealer to retail and wholesale clients for the past 12 years"; (2) The only person engaged by Camelot with that experience of options trading and engaging in a condor strategy was Mr King; (3) Mrs King performed only an administrative role. ([69]) (ap) Mr King was the only officer at Camelot authorised to place trades for clients. ([70])

Mr King was the author of the Camelot Marketing Documents (aq) The Camelot Marketing Documents set out in detail the options trading strategy to be engaged in by Camelot, using the services of a professional trader, and refer to Mr King's personal experience as a professional trader. ([71]) (ar) All of the Camelot Marketing Documents were reviewed by Mr King prior to them being published. ([72]) (as) In all of the circumstances, Mr King was the author of each of the Camelot Marketing Documents: (1) "Seven Secrets Revealed" dated 2008 (approx February-March 2008): i. As at Feb-March 2008, neither Mr Lauterstein nor Mr Titlow were engaged by Camelot; ii. Mr King expressly stated he was the author of other documents drafted at or about the same date; (2) "Introduction to Options Trading" dated 2008 (approximately February-March 2008): i. As at Feb-March 2008, neither Mr Lauterstein nor Mr Titlow were engaged by Camelot; ii. Mr King expressly stated he was the author of other documents drafted at or about the same date; (3) "Discover How Managed Options Trading Can Generate Passive Income for YOU - Investment Notes" dated March 2008: expressly authored by Mr King; (4) "Investment Notes" dated October 2008: expressly authored by Mr King; (5) "Taking Advantage of Market Conditions April 2009": expressly authored by Mr King. ([73]) (at) In all of the circumstances, it should be inferred that Mr King caused or authorised the Camelot Marketing Documents to be published on the Camelot website and distributed to potential clients at Public Seminars. ([74])

Factual Conclusions regarding Mr King's making of and Involvement in the Representations made in Camelot Marketing Documents (au) As Mr King was the author of the Camelot Marketing Documents, and caused or authorised the Camelot Marketing Documents to be published on the Camelot website and distributed to potential clients at Public Seminars, Mr King made or authorised the making of each of the statements set out in Annexures A-D. ([75]) (av) … during the period from March 2008 to October 2010, Mr King knew that: (1) clients of Camelot had not earned significant returns from options trading; (2) neither he nor Camelot had reasonable grounds for believing that potential clients of Camelot could expect to earn significant returns from options trading; (3) Camelot did not have experience in implementing a successful strategy, methodology, formula or concept to generate significant returns from investments in an options trading market; and (4) neither he nor Camelot had reasonable grounds for believing that Camelot is able to show potential clients how they can achieve significant returns by investing in an options trading market. ([76])

Mr King conducted all of the options trading and recommendations provided by Camelot (aw) All trade recommendations made by Camelot to clients were formulated and approved by Mr King. ([77]) (ax) Mr King was the person responsible for determining trade recommendations for Camelot clients based on each client's specific accounts. (However, in practice, there was only one trade recommended for all clients.) ([78]) (ay) Trade recommendations approved by Mr King were sent by Camelot to clients by email for approval by the clients. ([79]) (az) All trading conducted by Camelot on behalf of clients was conducted and placed by Mr King. ([80]) (ba) Mr King was responsible for checking that trades that were placed were the trades that had been recommended and approved. ([81]) (bb) Mr King was responsible for monitoring client accounts for the purpose of ensuring that the account was being managed in accordance with the risk management strategy regarding the risk to clients of open trading positions. ([82]) (bc) Mr King was responsible for ensuring that the management of client funds accorded with the strategy of maintaining one third of a client's money invested, one third of a client's money available for margin calls and one third of a client's money available for reserves. ([83]) (bd) It follows that, during the period from March 2008 to October 2010, Mr King was responsible for the following services provided by Camelot to its clients (see paragraph 12 above): (1) Monitoring of options markets by a professional options trader for the purpose of seeking and identifying opportunities to trade options for profit on behalf of clients; (2) The selecting and making of options trading recommendations to clients by a professional options trader, for the purpose of making profits for clients; and (3) Monitoring and management of client trading accounts for the purpose of making trading recommendations to manage the risk to clients of open trading positions. ([84]) (be) By reason of the above, it should be inferred that Mr King was, at all times, aware of the likely and actual impact commissions would have and were in fact having on the trading outcomes of Camelot clients who were engaged in the Camelot options trading strategy, including being aware of the client losses (set out in paragraphs 60-63 above) as they were occurring. ([85])

The Clients' Losses 30 In the period between January 2008 and December 2009, Camelot advised 51 clients to engage in a Condor trading strategy using a trading account with MF Global. Fifty of those clients actively traded. Forty-eight of the 50 active client trading accounts incurred net losses. In total, the 50 clients made a loss of A$2,470,748. A$2,451,944 was deducted by Camelot from those 50 client trading accounts on account of brokerage commissions. 31 In the calendar year 2010, Camelot advised 20 clients to engage in a Condor trading strategy using a trading account with Berkeley Futures Limited. Sixteen of those clients actively traded. All 16 incurred net losses. In total, the 16 clients who actively traded made a loss of A$982,432. In total, A$1,031,474 was deducted by Camelot from the trading accounts of those 16 clients on account of brokerage commissions. 32 It is obvious from these figures that the quantum of the losses suffered by the clients of Camelot from engaging in options trading was fairly much equivalent to the amount of brokerage commissions earned by Camelot in respect of that trading.

The Relevant Statutory Provisions 33 Section 1041H of the Corporations Act provides: 1041H Misleading or deceptive conduct (civil liability only) (1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. Note 1: Failure to comply with this subsection is not an offence. Note 2: Failure to comply with this subsection may lead to civil liability under section 1041I. For limits on, and relief from, liability under that section, see Division 4. (2) The reference in subsection (1) to engaging in conduct in relation to a financial product includes (but is not limited to) any of the following: (a) dealing in a financial product; (b) without limiting paragraph (a): (i) issuing a financial product; (ii) publishing a notice in relation to a financial product; (iii) making, or making an evaluation of, an offer under a takeover bid or a recommendation relating to such an offer; (iv) applying to become a standard employer sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) of a superannuation entity (within the meaning of that Act); (v) permitting a person to become a standard employer sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) of a superannuation entity (within the meaning of that Act); (vi) a trustee of a superannuation entity (within the meaning of the Superannuation Industry (Supervision) Act 1993) dealing with a beneficiary of that entity as such a beneficiary; (vii) a trustee of a superannuation entity (within the meaning of the Superannuation Industry (Supervision) Act 1993) dealing with an employer sponsor (within the meaning of that Act), or an associate (within the meaning of that Act) of an employer sponsor, of that entity as such an employer sponsor or associate; (viii) applying, on behalf of an employee (within the meaning of the Retirement Savings Accounts Act 1997), for the employee to become the holder of an RSA product; (ix) an RSA provider (within the meaning of the Retirement Savings Accounts Act 1997) dealing with an employer (within the meaning of that Act), or an associate (within the meaning of that Act) of an employer, who makes an application, on behalf of an employee (within the meaning of that Act) of the employer, for the employee to become the holder of an RSA product, as such an employer; (x) carrying on negotiations, or making arrangements, or doing any other act, preparatory to, or in any way related to, an activity covered by any of subparagraphs (i) to (ix). (3) Conduct: (a) that contravenes: (i) section 670A (misleading or deceptive takeover document); or (ii) section 728 (misleading or deceptive fundraising document); or (b) in relation to a disclosure document or statement within the meaning of section 953A; or (c) in relation to a disclosure document or statement within the meaning of section 1022A; does not contravene subsection (1). For this purpose, conduct contravenes the provision even if the conduct does not constitute an offence, or does not lead to any liability, because of the availability of a defence. 34 Section 12DA of the ASIC Act is in the following terms: 12DA Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. (1A) Conduct: (a) that contravenes: (i) section 670A of the Corporations Act (misleading or deceptive takeover document); or (ii) section 728 of the Corporations Act (misleading or deceptive fundraising document); or (b) in relation to a disclosure document or statement within the meaning of section 953A of the Corporations Act; or (c) in relation to a disclosure document or statement within the meaning of section 1022A of the Corporations Act; does not contravene subsection (1). For this purpose, conduct contravenes the provision even if the conduct does not constitute an offence, or does not lead to any liability, because of the availability of a defence. (2) Nothing in sections 12DB to 12DN limits by implication the generality of subsection (1). 35 In both s 12DA(1) of the ASIC Act and s 1041H(1) of the Corporations Act, the concept of "a financial service" or "financial services" is referred to. 36 Section 766A(1) of the Corporations Act provides as follows: 766A When does a person provide a financial service? General (1) For the purposes of this Chapter, subject to paragraph (2)(b), a person provides a financial service if they: (a) provide financial product advice (see section 766B); or (b) deal in a financial product (see section 766C); or (c) make a market for a financial product (see section 766D); or (d) operate a registered scheme; or (e) provide a custodial or depository service (see section 766E); or (f) engage in conduct of a kind prescribed by regulations made for the purposes of this paragraph. 37 Subsection (2)(b) of s 766A is not presently relevant. 38 Both s 766A and s 1041H are in Ch 7 of the Corporations Act. 39 For the purposes of s 12DA of the ASIC Act, a person is said to provide a financial service in the circumstances set forth in s 12BAB(1) of the ASIC Act (see subpar (a) of the definition of "financial service" in s 5(1) of the ASIC Act). Section 12BAB(1) of the ASIC Act provides: 12BAB Meaning of financial service When does a person provide a financial service? (1) For the purposes of this Division, subject to paragraph (2)(b), a person provides a financial service if they: (a) provide financial product advice (see subsection (5)); or (b) deal in a financial product (see subsection (7)); or (c) make a market for a financial product (see subsection (11)); or (d) operate a registered scheme; or (e) provide a custodial or depository service (see subsection (12)); or (f) operate a financial market (see subsection (15)) or clearing and settlement facility (see subsection (17)); or (g) provide a service that is otherwise supplied in relation to a financial product (other than a carbon unit, an Australian carbon credit unit or an eligible international emissions unit); or (h) engage in conduct of a kind prescribed in regulations made for the purposes of this paragraph. 40 Section 12BAB(5) to s 12BAB(8) provide: Meaning of financial product advice (5) For the purposes of this section, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence; but does not include anything in: (c) a document prepared in accordance with requirements of Chapter 7 of the Corporations Act, other than a document of a kind prescribed by regulations made for the purposes of this paragraph; or (d) any other document of a kind prescribed by regulations made for the purposes of this paragraph. (6) Advice given by a lawyer in his or her professional capacity about matters of law, legal interpretation or the application of the law to any facts is not financial product advice. Meaning of dealing (7) For the purposes of this section, the following conduct constitutes dealing in a financial product: (a) applying for or acquiring a financial product; (b) issuing a financial product; (c) in relation to securities or managed investment interests - underwriting the securities or interests; (d) varying a financial product; (e) disposing of a financial product. (8) Arranging for a person to engage in conduct referred to in subsection (7) is also dealing in a financial product, unless the actions concerned amount to providing financial product advice. 41 Section 763A of the Corporations Act defines "financial product". That section provides: 763A General definition of financial product (1) For the purposes of this Chapter, a financial product is a facility through which, or through the acquisition of which, a person does one or more of the following: (a) makes a financial investment (see section 763B); (b) manages financial risk (see section 763C); (c) makes non cash payments (see section 763D). This has effect subject to section 763E. (2) For the purposes of this Chapter, a particular facility that is of a kind through which people commonly make financial investments, manage financial risks or make non cash payments is a financial product even if that facility is acquired by a particular person for some other purpose. (3) A facility does not cease to be a financial product merely because: (a) the facility has been acquired by a person other than the person to whom it was originally issued; and (b) that person, in acquiring the product, was not making a financial investment or managing a financial risk. 42 Section 763B of the Corporations Act sets out the circumstances in which a person makes a financial investment for the purposes of s 763A. Section 763B provides: 763B When a person makes a financial investment For the purposes of this Chapter, a person (the investor) makes a financial investment if: (a) the investor gives money or money's worth (the contribution) to another person and any of the following apply: (i) the other person uses the contribution to generate a financial return, or other benefit, for the investor; (ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); (iii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and (b) the investor has no day to day control over the use of the contribution to generate the return or benefit. Note 1: Examples of actions that constitute making a financial investment under this subsection are: (a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day to day affairs of the company); or (b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day to day control over the operation of the scheme). Note 2: Examples of actions that do not constitute making a financial investment under this subsection are: (a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or (b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment). 43 Section 766B(1) defines financial product advice as follows: 766B Meaning of financial product advice (1) For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence. 44 Having regard to the definitions of financial product and financial service or financial services in both the Corporations Act and the ASIC Act, the making of a recommendation or the giving of advice to engage in trading of or an investment in options (including derivatives) is financial product advice and an option contract is a financial product. The making of such recommendations or the giving of such advice constitutes the provision of financial services within the meaning of s 766A of the Corporations Act. 45 As submitted by ASIC, the phrase "in relation to" when used in both s 1041H(1) of the Corporations Act and s 12DA(1) of the ASIC Act are words of great breadth (Australian Securities and Investments Commission v Narain (2008) 169 FCR 211 at [68] (p 222)).

Consideration 46 The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. It is an objective question that the Court must determine for itself. Conduct is misleading or deceptive if it leads a person into error or if it induces or is capable of inducing error or leads to an erroneous assumption or misconception. Conduct is misleading or deceptive if it causes, or is likely to cause, a person to misinterpret, or be deluded as to, the relevant facts. Conduct is likely to mislead or deceive if there is a real but not remote possibility of it doing so. For the purposes of establishing liability under s 1041H(1) of the Corporations Act or s 12DA(1) of the ASIC Act, it is not necessary for ASIC to prove that the conduct in question actually deceived or misled anyone. 47 In determining whether a contravention of s 1041H or s 12DA has occurred, the task of the Court is to examine the relevant course of conduct as a whole. The context in which the alleged conduct occurred is to be determined in light of the relevant surrounding facts and circumstances. It includes the contents of the representations that were in fact made and, in the context of a document, the whole of the contents of the document and includes any other statements made that might impact on the relevant representations. 48 Although the relevant test is objective, the attributes of the target audience are relevant. Once the relevant section or sections of the public, by reference to whom the question of whether conduct is, or is likely to be, misleading or deceptive falls to be tested, is identified, then the matter is to be considered by reference to all who come within it, including the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, and men and women of various ages pursuing a variety of vocations. 49 ASIC contends that, by making the express statements recorded in Annexures "A", "B", "C" and "D" to the Consent Orders, Camelot and Mr King also made the representations which I have summarised at [20] above. The liquidator of Camelot did not challenge these contentions made by ASIC. Mr King went further and effectively admitted that ASIC had made good those contentions. 50 Although I have some reservations as to whether the precise representations alleged by ASIC to arise from the express statements made by Mr King in fact do arise from those express statements, I am satisfied that clients of Camelot were induced to become clients of Camelot by representations to the effect that they would make significant profits by options trading taking the advice proffered by Camelot and using its so-called Condor strategies. These representations were designed to procure clients to actively trade in an options trading market thereby providing regular opportunities for Camelot to earn brokerage commissions in respect of those trades. For Camelot, the substance of the exercise was to procure clients who would actively trade in an options trading market, irrespective of the risk and irrespective of the likely true returns, in order to derive brokerage commissions for Camelot. 51 These inducements and blandishments were misleading or deceptive or likely to mislead or deceive because they did not adequately explain the risks involved and did not make clear to prospective clients the potential for Camelot to make significant profits while the clients made significant losses. 52 By engaging in the conduct identified in Annexures "A", "B", "C" and "D" to the Consent Orders, Camelot contravened s 1041H of the Corporations Act and s 12DA(1) of the ASIC Act. 53 Section 1324(1) of the Corporations Act provides as follows: 1324 Injunctions (1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: (a) a contravention of this Act; or (b) attempting to contravene this Act; or (c) aiding, abetting, counselling or procuring a person to contravene this Act; or (d) inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or (f) conspiring with others to contravene this Act; the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. 54 In the present case, ASIC relies upon subpars (1)(c) and (1)(e) of s 1324. 55 For the purposes of s 1324(1)(c) of the Corporations Act, the words "aid, abet, counsel or procure" are instances of one general idea being that the accessory is in some way linked in purpose with the person actually contravening the relevant provision and is by his or her words or conduct doing something to bring about, or rendering more likely, such contravention (Giorgianni v The Queen (1985) 156 CLR 473 at 492). 56 For a person to be "knowingly concerned in" a contravention, he or she must have "knowledge of the essential facts constituting the contravention", although it need not be proved that the person knew that the matters in question constituted a contravention (Yorke v Lucas (1985) 158 CLR 661 at 670; Smithers v Beveridge (1994) 14 ACSR 197 at 201). 57 The accessory must be an intentional participant. 58 The mere making of representations on behalf of a corporation, without knowledge of their false or their misleading or deceptive qualities, could not constitute the necessary involvement for the purposes of accessory liability. Nothing less than actual knowledge of the essential facts constituting the contravention will suffice for a finding of liability against a person alleged to have been involved in the contravention. 59 What is required is that the accessory knows of the matters that lead to the representations being characterised as false or misleading or deceptive. 60 In the present case, the evidence establishes that Mr King made all of the representations at the seminars and presentations about which ASIC complains and was directly responsible for the drafting of material accessible at Camelot's website and contained in its promotional materials. In any event, Mr King accepts liability pursuant to s 1324(1)(c) and (1)(e) of the Corporations Act. 61 I am satisfied, therefore, that the Court has power to grant injunctive relief against Camelot pursuant to s 1324(1)(a) of the Corporations Act and against Mr King pursuant to s 1324(1)(c) and (1)(e) of the Corporations Act. I am also satisfied that, in the circumstances of the present case, the Court should grant the injunctions sought. 62 The Court also has power to grant the injunctions sought against Camelot pursuant to s 12GD of the ASIC Act given that I am satisfied that Camelot (and possibly also Mr King) has breached s 12DA of that Act. 63 Section 912A(1)(a) of the Corporations Act requires a financial services licensee to do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly. Under s 915B(3) of the Corporations Act, ASIC may suspend or cancel an Australian Financial Services Licence held by a body corporate, by giving written notice to the body corporate, if the body corporate becomes an externally administered body corporate. 64 In the present case, by notice dated 28 July 2011, ASIC cancelled Camelot's AFSL with effect from 28 July 2011 upon terms that the licence should continue in effect as though the cancellation had not happened for the purpose of s 912A(1)(g) of the Corporations Act to the extent that it required Camelot to have a dispute resolution scheme complying with s 912A(2)(b) of the Corporations Act. 65 Presumably, the cancellation was effected because Camelot had gone into voluntary liquidation on 18 April 2011. 66 In this proceeding, ASIC also relied upon a contention that Camelot had contravened s 912A(1)(a). 67 The fundamental contention made by ASIC in support of its case that Camelot had contravened s 912A(1)(a) was that Camelot was guilty of "churning". ASIC submitted that "churning" refers to trading of a size or frequency with the effect of generating excess commissions or describes circumstances where a broker engages in excessive buying or selling of securities in a customer's account chiefly to generate commissions that benefit the broker. ASIC referred to a decision of the United States Commodity Futures Trading Commission which considered churning (Johnson v Hurwitz, US CFTC decision, 24 July 2009, Judgment Officer McGuire). In that case, at pp 28-30 of the judgment, it was held that, in order to establish "churning", it was necessary to demonstrate that: (a) The defendants "controlled" the level and frequency of trading in the client accounts (which involves de facto control over the trading in that account); (b) The defendants chose an overall volume of trading that was excessive in light of the client's trading objectives; and (c) The defendants acted with either intent to defraud or in reckless disregard of the clients' interests. 68 At the hearing before me, ASIC submitted that it was not necessary, in Australia, for a plaintiff alleging a breach of s 912A(1)(a) of the Corporations Act on account of "churning" to prove an intent to defraud or reckless indifference to the client's interests. ASIC made clear that, in the present case, it did not contend that Mr King had engaged in the conduct about which complaint is made with intent to defraud or in reckless disregard of the client's interests in the sense explained in Johnson v Hurwitz. 69 In support of the relief which it seeks based upon s 912A(1)(a) of the Corporations Act, ASIC made the following submissions: (a) The words "efficiently, honestly and fairly" must be read as a compendious indication meaning a person who goes about their duties efficiently having regard to the dictates of honesty and fairness, honestly having regard to the dictates of efficiency and fairness, and fairly having regard to the dictates of efficiency and honesty: Story v National Companies and Securities Commission (1988) 13 NSWLR 661 at 672. ([126]) (b) The words "efficiently, honestly and fairly" connote a requirement of competence in providing advice and in complying with relevant statutory obligations: Re Hres and Australian Securities and Investments Commission (2008) 105 ALD 124 at [237]. They also connote an element not just of even handedness in dealing with clients but a less readily defined concept of sound ethical values and judgment in matters relevant to a client's affairs: Re Hres and Australian Securities and Investments Commission (2008) 105 ALD 124 at [237]. ([127]) (c) The word "efficient" refers to a person who performs his duties efficiently, meaning the person is adequate in performance, produces the desired effect, is capable, competent and adequate: Story v National Companies and Securities Commission (1988) 13 NSWLR 661 at 672. Inefficiency may be established by demonstrating that the performance of a licensee's functions falls short of the reasonable standard of performance by a dealer that the public is entitled to expect: Story v National Companies and Securities Commission (1988) 13 NSWLR 661 at 679. ([128]) (d) It is not necessary to establish dishonesty in the criminal sense: R J Elrington Nominees Pty Ltd v Corporate Affairs Commission (SA) (1989) 1 ACSR 93 at 110. The word "honestly" may comprehend conduct which is not criminal but which is morally wrong in the commercial sense: R J Elrington Nominees Pty Ltd v Corporate Affairs Commission (SA) (1989) 1 ACSR 93 at 110. ([129]) (e) The word "honestly" when used in conjunction with the word "fairly" tends to give the flavour of a person who not only is not dishonest, but also a person who is ethically sound: Story v National Companies and Securities Commission (1988) 13 NSWLR 661 at 672. ([130]) 70 The submissions which I have extracted at [69] above are correct and I accept them. 71 In the present case, the substance of ASIC's contention in respect of its case based upon a contravention of s 912A(1)(a) of the Corporations Act was that Camelot, under the direction of Mr King, induced its clients to trade in options in an endeavour to secure for Camelot excessive brokerage commissions arising from such trades. The essence of ASIC's case was that the overriding consideration on the part of Camelot and Mr King in procuring Camelot's clients to trade as they did was the derivation of brokerage commissions by Camelot. In this sense, the commissions actually derived were excessive and could not have been justified had Camelot and Mr King paid due regard to the clients' interests. 72 At the very least, this stratagem adopted by Camelot and Mr King was not honest, in a commercial sense, and certainly did not constitute the provision of financial services fairly within the meaning of s 912(1)(a) of the Corporations Act. I do not need to decide whether, in order to establish "churning", ASIC must prove that Camelot and Mr King intended to defraud Camelot's clients or acted in reckless disregard of their interests. The facts asserted at [85] of ASIC's Submissions (which paragraph is set out at [29(be)] above) are sufficient to justify the making of the Consent Orders when regard is had to all of the circumstances recorded in the earlier subparagraphs set out at [29] above. 73 For the above reasons, I am satisfied that ASIC has established the contraventions of the Corporations Act and the ASIC Act which it submitted underpin the declarations and orders in the Consent Orders. 74 In support of the declarations sought by ASIC to which Mr King has agreed, ASIC made the following submissions:

Declaratory Relief (a) It is well established that a regulator, in exercising its function under a statute, will have a "real interest" in seeking a declaration that a person contravened a statute: Australian Competition & Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, [2000] FCA 1885 at [30]; Australian Competition & Consumer Commission v Henry Kay National Investment Institute Pty Ltd [2004] FCA 1363 at [199]; Australian Securities & Investments Commission v West [2008] SASC 111 at [207]; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43 at [271]. ([132]) (b) Declarations sought by regulators serve important law enforcement purposes: Australian Securities & Investments Commission v McDougall (2006) 229 ALR 158 at [55] citing Australian Softwood Forrest Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121 at 125. ([133]) (c) The public interest in determining and declaring that a person's conduct has contravened provisions of the law is an appropriate basis for a declaratory order even if it otherwise only has "slight utility": Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 at 608. ([134]) (d) There is a public interest in declaring that a person by engaging in certain conduct has contravened the law which gives the declaration utility because: (1) it is an appropriate means by which to record the court's disapproval of the contravening conduct: Australian Competition and Consumer Commission (ACCC) v Chen (2003) 132 FCR 309 at [35]-[36] citing Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 100; and Australian Securities & Investments Commission v McDougall (2006) 229 ALR 158 at [55]; (2) it vindicates the regulator's claim that there was a contravention and may assist the regulator in carrying out its duties and functions under statute (sometimes as a means of deterrence): Australian Competition & Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, [2000] FCA 1885 at [34]; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43 at [272]; (3) it may assist in clarifying the law: Australian Competition & Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, [2000] FCA 1885 at [34]; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43 at [272]; (4) it may expose significant contraventions of law, particularly consumer protection legislation, through the regulator bringing the decision to the community's attention: Australian Competition and Consumer Commission v Ozdirect Online Brands Pty Ltd [2009] FCA 1604 at [53]; and (5) in appropriate cases, warn others of the dangers from the contravening conduct, which may be amplified where the contravening conduct was directed to a large number of the public over a significant period of time: Australian Competition and Consumer Commission v IMB Group Pty Ltd (1999) ATPR 41-688, [1999] FCA 313 at [21]. ([135])

Declarations by consent (or not opposed) (e) Declarations will not usually be made when the only material before the court is the consent of the parties: BMI Ltd v Federated Clerks Union of Australia (1983) 51 ALR 401 at 412. However, a different position may apply where the regulator has presented evidence and submissions in support of the declaratory relief sought: Australian Securities and Investments Commission v Fuelbanc Australia Ltd (2007) 162 FCR 174 at [61]. ([136]) (f) The grant of declaratory relief is dependent on there being "a proper contradictor, that is to say, someone presently existing who has a true interest to oppose the declaration sought": Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437; Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 at 605. ([137]) (g) A "proper contradictor" requires the existence of a contradictor, as a party joined to the proceeding; it does not require that the party actually opposes the declarations sought: ACCC v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 at [44]; cf. ACCC v MSY Technology Pty Ltd (No 2) [2011] FCA 382. ([138]) (h) However, a declaration should be made unless there are proper grounds to the contrary, subject to the proviso that a "legitimate and powerful" factor against the grant would be the possibility of embarrassment in a practical sense to a non-party: Corporate Affairs Commission (NSW) v Transphere Pty Ltd (1988) 15 NSWLR 596 at 608. ([139]) (i) Further, the fact that the defendants consent to the declarations is a "powerful reason" in favour of granting contravention declarations, particularly where they are well aware of what matters are in their interests and what matters are not: Australian Securities and Investments Commission v Varsity Lodge Pty Ltd (2007) 65 ACSR 400 at [27][29]. ([140]) 75 At the hearing before me, ASIC drew my attention to the decision of Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609 at first instance in which Perram J declined to make declarations which had been agreed between the applicant/regulator and the respondents. Perram J was asked to grant the relief which had been agreed between the parties upon the basis of a Statement of Agreed Facts alone. His Honour considered and discussed the notion prevalent in some of the relevant authorities that declarations of right should not be made on the basis of submissions alone. His Honour held that, although there was no principle of general application to that effect, the Court would usually require that the declarations sought be supported by evidence. His Honour went on to further hold that, having regard to the terms of s 191 of the Evidence Act 1995 (Cth), a statement of agreed facts would usually suffice. His Honour also held that declarations of right should not be made in the absence of a contradictor. 76 His Honour took the view that a "contradictor" for this purpose was a party in respect of whom there could be a meaningful res judicata (at [37] (p 618)). His Honour concluded that, although he doubted the correctness of the decision, he was bound by the Full Court decision in BMI Ltd v Federated Clerks Union of Australia (NSW) Branch (1983) 51 ALR 401 to hold that the Court should not make declarations of right by consent in the absence of an actual contest as to whether the declarations should be made. 77 At [43]-[44] (pp 619-620), his Honour said: 43 In any event, this case involves public rights. The commission is a regulator and it seeks vindication of the public's right not to be misled. The principle reason the commission desires, understandably, to have the declarations made is to serve that purpose and to educate. These are public matters. For that reason, I do not think that I can distinguish BMI. Conclusions in summary: (a) The suggested principles that declaration should only be made on evidence is dubious in origin, insubstantial in its persuasive content and is not required either by Forster or BMI. (b) To the extent that Allergy Pathway suggests that BMI propounds such a rule it is, with respect, plainly wrong because it overlooks the fact that the court in BMI had evidence before it and did not decline the declarations on the basis suggested. (c) In any event, the rule, even if it exists, is overcome by s 191 of the Evidence Act in the present case. (d) This court is bound by Forster not to make declarations without a contradictor. (e) As a matter of correct legal doctrine a contradictor will be present when all proper defendants have been joined and so are bound to the result. They will not cease to be contradictors merely because they consent to the proposed declarations. (f) BMI has, as its ratio decidendi, the contrary proposition which binds me. 44 In those circumstances, I conclude that I should not make the declarations which are sought. 78 In Australian Competition and Consumer Commission v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752, Dodds-Streeton J distinguished Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2). In particular, at [30]-[32], her Honour said (referring to the judgment of Perram J): 30 His Honour nevertheless concluded that the majority view in BMI was probably incorrect and acknowledged that, contrary to his understanding of BMI, a large number of declarations by consent had in fact been made by this court. 31 Perram J concluded at [43]: (d) this court is bound by Forster not to make declarations without a contradictor; (e) as a matter of correct legal doctrine a contradictor will be present when all proper defendants have been joined and so are bound to the result. They will not cease to be contradictors merely because they consent to the proposed declarations; (f) BMI has, as its ratio decidendi, the contrary proposition which binds me. 32 While in my view his Honour's conclusions in sub-paragraphs 43(d) and (e) are correct, I am not, with respect, persuaded that the ratio of BMI is such as to preclude single judges of this court from making declarations involving a public right in the absence of a contradictor who contests that relief. 79 Her Honour went on to hold, at [41]-[44]: 41 In my opinion, while the majority in BMI characterised a proper contradictor as a party who contested the question, their discussion of that issue was expressly within the context of an application under s 108 of the C&A Act and the peculiar features of the case before them. On my reading of their Honours' reasons, they did not purport to enunciate absolute requirements for a proper contradictor generally applicable in all contexts. Further, the absence of a proper contradictor (as defined) was but one of a number of factors which the majority proceeded to consider as relevant to the exercise of their discretion. Their Honours noted that the absence of a contradictor who contested the relief sought had a particular impact on some other relevant factors, but it did not appear to be, in itself, decisive. Their Honours' comprehensive analysis of a number of other relevant factors suggests the contrary. 42 As the joint submissions stated: 77. The true ratio in BMI Ltd is that, as a matter of discretion, the Court was not persuaded to grant the declaratory relief because of a stated concern that such an order could give a misleading impression in relation to activities of parties not before the Court. This (merely) reflects an exercise of discretion in the circumstances of that case. The majority judgment neither states nor purports to state a more general principle of the type identified by Perram J. 78. Further, and in any event, the matters causing concern which presented in BMI Ltd do not present in the circumstances of the present case. Those matters, identified above, that persuaded the Court in BMI Ltd to exercise its discretion to not make the declaration there sought by the applicant are not present in this controversy. 43 For the above reasons, in my opinion, the BMI majority's requirement for a contradictor contesting the relief sought may be confined to declarations sought under the particular legislation relevant in that case and, moreover, was but one of a number of factors relevant to the exercise of the discretion. 44 Consequently, I considered that in the present case, the requirement for a proper contradictor was satisfied despite the absence of any contest, and it was both permissible and appropriate to make the relevant declarations by consent. 80 The ACCC appealed Perram J's decision in Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) to the Full Court of this Court. The decision of the Full Court was handed down on 19 April 2012 (Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56). 81 At [34], the Full Court held that Perram J had not been bound to refuse to grant the declaratory relief sought in ACCC v MSY Technology Pty Ltd (No 2) on the basis of an absence of a proper contradictor. The Full Court held that the matter had always involved the exercise of a judicial discretion. On appeal, the Full Court made the consent declarations which the parties had sought from Perram J. 82 The reasoning of the Full Court may be summarised as follows: (a) Under s 21 of the Federal Court of Australia Act 1976 (Cth), this Court has power to grant declaratory relief in all cases where jurisdiction has been conferred upon it, whether or not any consequential relief is or could be claimed. It also has an inherent power to grant such relief (at [8]-[9]). (b) In Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448, Lord Dunedin explained that, in general, one of the requirements which an applicant for a declaration of right must satisfy is that there be a proper contradictor. His Lordship said that a proper contradictor is "… someone presently existing who has a true interest to oppose the declaration sought" (at [12]). (c) This statement was approved by Gibbs J (as he then was) in Forster v Jododex Australia Pty Limited (1972) 127 CLR 421 at 437-438 (at [12]). (d) There is a difference between having a true interest (that is to say, a real and genuine interest) to oppose the grant of declaratory relief and, having that interest, choosing whether or not actually to oppose the grant of that relief (at [14]). (e) When proper regard is paid to the judgment of Dawson J in Oil Basins Limited v Commonwealth of Australia (1993) 178 CLR 643 at 648-650 and the judgment of French J (as he then was) in IMF (Australia) Ltd v Sons of Gwalia Ltd (Administrator Appointed) (2004) 211 ALR 231 at [47] (p 244), there is no requirement that all defendants in the action in which the declaration is sought must actually oppose the plaintiff. In IMF (Australia) Ltd v Sons of Gwalia Ltd (Administrator Appointed) at [47] (p 244), French J said: The requirement of a proper contradictor in a declaratory context is not merely to ensure that the court will be provided with all materials but also that absent a contradictor there is no person to be bound by the relief sought: Acs v Anderson [1975] 1 NSWLR 212 at 215 per Hutley JA citing P W Young, Declaratory Orders, 1st ed, Butterworths, Sydney, 1975, p 210. A proper contradictor, for jurisdictional purposes, in my opinion cannot be confined to the class of party who comes to court ready to oppose the relief sought. There may be a case in which a party, whether a private person or body or a statutory regulator, expresses opposition to, and an intention to oppose, a proposed course of action by another party on the basis that it is in breach of some contractual or statutory prohibition. The party opposing the conduct may however decide for any one or more of a variety of reasons not to contest declaratory proceedings about the lawfulness of the proposed conduct. So the declaration may be made by consent or may be uncontested. This does not mean that the court lacks jurisdiction or power to grant the declaration in such a case. The proceedings will have resolved a pre-existing controversy. A more difficult question arises where a party with an interest in opposing a particular course of conduct refuses to say whether it will take any action in respect of that conduct. Such a party may be said to be one which, notwithstanding its silence, has an interest in opposing the proposed conduct. (at [14]-[18]). (f) To the extent that the majority judgment of Keely and Beaumont JJ in BMI Ltd suggests that the absence of actual opposition by an interested party to the declaratory relief sought means that there is no proper contradictor and that this disentitles the applicant to a grant of declaratory relief, it evidences a misunderstanding of the explanation given by Lord Dunedin in Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd which was approved by Gibbs J in Forster v Jododex Australia Pty Limited and should not be followed. The correct position is that stated by Dawson J in Oil Basins Limited v Commonwealth of Australia and by French J in IMF (Australia) Ltd v Sons of Gwalia Ltd (Administrator Appointed) (at [30]). 83 In the present case, there is before me a very detailed and specific adumbration of ASIC's contentions as to the findings of fact which I should make. These proposed findings are not challenged by either Camelot or Mr King. In addition, I have before me a substantial body of evidence which I am satisfied amply supports ASIC's contentions in respect of the relevant facts. There is, therefore, no difficulty in satisfying any requirement that declarations of right ought not be made in the absence of evidence. 84 It seems to me that, in the present case, both Camelot and Mr King had and continue to have a real and genuine interest in opposing the declaratory relief which was originally sought by ASIC. Indeed, the declarations set out in the Consent Orders are not as broadly framed as those which had been initially claimed by ASIC. I infer that the declarations set out in the Consent Orders have been narrowed from those originally sought by ASIC as a result of negotiations among the parties and the very real opposition to those declarations conveyed by Mr King to ASIC. In any event, in light of the evidence tendered by ASIC, Camelot has decided neither to consent to nor to oppose the making of those declarations and Mr King has agreed to those declarations being made. Thus, in the case of Camelot, the making of the declarations set out in the Consent Orders is uncontested and, in the case of Mr King, the making of those declarations is agreed. Camelot and Mr King no doubt have their reasons for adopting the stance which they have. Nonetheless, the Consent Orders resolve a genuine pre-existing controversy and both Camelot and Mr King remain proper contradictors in respect of ASIC's claim that those declarations should be made. 85 For all of the above reasons, I am of the view that this is an appropriate case for the making of declarations at the suit of the relevant regulator (ASIC) and I propose to make the declarations and orders substantially in the form agreed between ASIC and Mr King in the Consent Orders. In the circumstances, the agreed injunctions as between ASIC and Mr King are, in my view, also completely justified. 86 The only orders which affect Camelot itself are Orders 14, 15 and 16 in the Consent Orders. 87 The first of those orders is an injunction which prohibits both Camelot and Mr King from soliciting investors in options trading. On the material before me, as I have already said, that injunction should be granted, whether or not Camelot consents to it. 88 Both of Orders 15 and 16 are for the benefit of Camelot and in no way constitute any detriment to it. 89 For all of the above reasons, I will make the declarations and orders in terms substantially as agreed between ASIC and Mr King as recorded in the Consent Orders. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.