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Case note
ASIC v Adler (No 3) (2002) 20 ACLC 576

Parties
1 2 3 Plaintiff: Australian Securities and Investment Commission (ASIC) Defendants: Rodney Adler, Raymond Williams, Dominic Fodera and the Adler Corporation Pty Limited Judge: Santow J

Facts
4 HIHC made an undocumented $10 million payment to a company controlled by Adler, PEE. Around the time of the payment, PEE became a trustee of a unit trust controlled by the Adler Corporation and two others. Units in the Trust were issued to HIHC at a price of $10 million. Adler Corporation had an existing entitlement to 10% of the Trust’s distributable income, while HIHC acquired a 90% entitlement. The $10 million payment was made in a way to ensure it would not come to the attention of the directors of HIH, apart from Adler, Williams and to a lesser degree Fodera. Using the $10 million payment shares in HIH were then purchased over two weeks. The stock market was given the impression that the purchase of shares were made by Adler or family interests associated with Adler. A further part of the $10 million payment was used to purchase various venture capital unlisted investments from Adler Corporation at cost. It was contended that Mr Adler breached his duties as a director or officer of HIH or HIHC under the Corporations Act 2001 (Cth) (Act). ASIC sought declarations that various alleged contraventions of the Act had been committed by the three personal defendants. Mr Adler was a non-executive director of HIH. Mr Adler was sued as a non-executive director of HIH and as an alleged officer (non-executive) of its wholly owned subsidiary HIHC. Mr Adler denied he was a director or officer of HIHC. ASIC relied on evidence that as a director of HIH, HIHC’s holding company, Mr Adler was a person who ‘participated in the making of decisions that affected the whole or a substantial party of the business of HIHC’. ASIC also stated that Mr Adler’s participation in investment decisions fell within the category of...
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