The Australian Securities and Investments Commission (ASIC) has filed a civil penalty action against Adam Blumenthal in Federal Court, alleging market manipulation and breach of his duties as a director of two companies, EverBlu Capital Pty Ltd and Creso Pharma Limited (now Melodiol Global Health Limited).。

ASIC also accepted court-enforceable commitments made by Blumenthal that he would cease to be involved in financial services within five years, that his corporate advisory firm Everblu would stop providing financial services to new customers and that it would apply to have its Australian Financial Services (AFS) licence cancelled.。

ASIC's investigation revealed that between 18 March and 15 November 2021, EverBlu breached its obligations as an Australian financial services licence holder by failing to properly follow procedures and take appropriate controls in relation to receiving and executing customer orders, using suspense accounts, keeping records and managing conflicts of interest.。

The ASIC survey also revealed that Blumenthal:

• as a director of EverBlu, failed to comply with EverBlu's conflict of interest policy and participated in EverBlu's breach of its obligations as an AFS licensee;
• Violation of EverBlu's personal trading policy by assisting its private company, Anglo Menda Pty Ltd, in providing loans to certain clients of EverBlu for trading Creso Pharma Limited (Creso) shares listed on the Australian Securities Exchange, of which Blumenthal is also a director。This includes lending more than $7 million to Tyson Scholz and more than $5 million to another EverBlu customer.。
• On 14 occasions (10 different days), he caused or facilitated certain customer orders to purchase Creso shares with the intent to indicate to the market that there were more individual bidders for Creso shares than there were actually bidders, thereby creating or creating false or misleading appearances in the Creso share market on the ASX, thereby participating in market manipulation。

The court action by the Australian Securities and Investments Commission seeks an order to disqualify Blumenthal from managing the company for five years and a fine.。

The Australian Securities and Investments Commission charged Blumenthal with:

• breached his duties as a director of EverBlu;
• Participated in market manipulation related to Creso stock;
• In hiring Scholz and another party (whose principal trading entity is also Everlu's client) to provide marketing and promotional services to Creso, breached their duties as directors of Creso。The Australian Securities and Investments Commission alleges that under these engagements, Creso paid Scholz more than $2 million and paid another party more than $1.2 million.。
• Scholz violated his duties as a director of Creso because his financial relationship with Scholz failed to avoid a conflict of interest.。

Under the terms of the commitment, which is enforceable by the court, EverBlu admitted that it had breached its obligations to act honestly, efficiently and fairly, and would stop providing any financial services to new customers and apply for cancellation of its AFS license within eight weeks.。

Blumenthal has pledged not to work in financial services for five years and to train before re-entering the industry.。