Wall Street-backed Aussie wealth firm sued by co-founder

[view original post]

The new dispute marks a return to the Australian courts for MWL and by extension Nasdaq-listed Focus, which is not a party to the County Court matter but owns 49.9 per cent of MWL.

The big M&A investor, based on Third Avenue in midtown Manhattan, counts private equity giants KKR and Stone Point Capital among its backers and has a market capitalisation of US$3.6 billion ($4.9 billion).

The Financial Review revealed last week that Focus’ plan to spend $1.3 billion buying up promising independent financial advice firms in Australia had been derailed by a messy, multi-year litigation against Mr White and MWL, which ended in February with all parties walking away after a confidential settlement.

The lawsuit – sparked in March 2019 when Mr White, a former police detective, filed a statement of claim against the US investor in the Federal Court of Australia – was never disclosed to the shareholders.

That omission came despite the company announcing to the Nasdaq in December last year it had acquired Brisbane wealth manager Westwood Group – an asset that was previously owned by MWL and appears to be the spoils of the confidential truce between the warring wealth managers.

Advertisement

Mr White took action against Focus after his American backer allegedly reneged on an agreement to finance MWL’s takeover ambitions, forcing him to seek a loan from Westpac to buy Westwood Group. Focus denied the claim and said MWL knew from the start it was unable to provide funding for mergers and acquisitions.

The dispute also resulted in Focus making misconduct allegations against MWL co-founder Nicholas Maikousis, who is now executive director of the Focus-backed firm, alleging he lied about his salary to obtain a refinancing from his home.

‘Period of instability’

The allegations were never tested in court as the parties settled in December 2020. Mr Maikousis denies the allegations. The Financial Review makes no claim to the veracity of the allegations, just that they were made by Focus in court documents.

“Allegations were made by the White parties about individuals and parties in court documents. There were no findings nor any determination made in relation to those allegations,” Mr Maikousis said in a statement via his lawyers.

“Any allegations made in relation to me are vehemently denied and I reserve my rights in relation to those allegations. The proceeding was settled without any admissions, ending what can be described as a period of instability.”

Advertisement

Mr Maikousis made a series of claims about Mr White after being sent a list of questions by the Financial Review. They cannot be published for legal reasons.

Mr White declined to comment on the County Court proceedings, but through his lawyer denied the claims. “Our client is a party to legal proceedings in the County Court of Victoria claiming entitlements and compensation flowing from his alleged wrongful dismissal,” said Mills Oakley partner Stuart Gibson in a statement.

Focus declined to comment on the County Court proceedings. A spokeswoman for Focus previously told the Financial Review: “We remain invested in MWL and are very bullish on the wealth advice industry in Australia. Any disputes related to MWL have been resolved months ago. We look forward to building upon our continuing and new partnerships in Australia for years to come.”

KKR did not respond to a request for comment.