Adam Blumenthal, the former chairman of Creso Pharma, has been fined $850,000 and barred from the financial services industry for five years by the corporate regulator after an investigation found he had breached his director duties, including alleged market manipulation tied to share trading in the listed cannabis company.
Blumenthal must also contribute $150,000 toward the cost of the Australian Securities and Investment Commission (ASIC) investigation, along with a further $100,000 in costs.
Despite the five-year ban from the finance industry — which extends to his advisory firm EverBlu Capital — Blumenthal will be permitted to retain ownership of a financial services company.
Blumenthal told The Australian that he had accepted ASIC's decision and was grateful to be allowed to keep his ownership stake in the company.
The investigation into Blumenthal began in November 2021 when federal police executed a raid on EverBlu's offices.
He resigned as Creso's chairman later that same month.
Among the alleged offences was his role in manipulating the market for shares in Creso, now trading as Melodiol Global Health.
ASIC said its investigation identified 14 instances in which EverBlu clients purchased Creso shares with the "intention of representing to the market that there were more individual bidders for Creso shares than existed".
Those transactions were structured to "create, or the cause the creation of a false or misleading appearance with respect to the market for Creso shares on the ASX", ASIC said.
The regulator alleged that EverBlu advanced $7 million to a social media influencer to acquire Creso shares, while a separate client received a loan of $5 million for the same purpose.
ASIC found that Blumenthal and EverBlu had breached their obligations under their Australian Financial Services (AFS) licence by failing to properly follow procedures and put in place adequate controls relating to the receipt and execution of client orders, the use of a suspense account, the maintenance of records and the management of conflicts of interest.
Alongside Blumenthal's five-year ban from financial services, EverBlu will have its AFS licence cancelled.
