ASIC Probes Private Equity Firm for Allegedly Gambling with Investor Funds

Australia’s top financial authority is stepping up its investigation into a private equity group accused of siphoning tens of millions of dollars in investor funds into gambling. The Australian Securities & Investments Commission (ASIC) claims that First Mutual Private Equity raised approximately $53 million from investors between March 2024 and July 2025, presenting their operations as legitimate private equity activity.

ASIC Found No Investment Activity Connected to the Funds

The Federal Court of Australia has granted the extension of the asset preservation orders initially issued on August 15. The orders freeze the bank accounts of First Mutual and its director, Gregory Cotton, preventing them from taking on new liabilities. Since the freeze was imposed by consent, neither party contested the updated orders. This extended deadline should help ASIC gather sufficient data on the operation.

As reported by the financial authority, investigations have failed to uncover any investment activity connected to the funds raised. These revelations exacerbate concerns that the money was never channeled into the advertised private equity ventures. ASIC suspects a significant portion of the funds likely financed high-stakes gambling activities, resulting in monumental losses.

The financial authority has not yet disclosed whether the gambling activities occurred in casinos or on online platforms. However, sources close to the case suggest that most of the missing money was lost in wagering. If true, the case would mirror an earlier 2023 legal action in Australia against an ex-financial advisor who misappropriated nearly $700,000 from clients to use for gambling.

The Authority Has Released Limited Details

The court has ordered Cotton to file a detailed affidavit by September 25 outlining his personal assets, liabilities, income, and client relationships. This disclosure should significantly bolster ASIC’s efforts to trace the investor funds and determine if other parties were involved. However, it is yet unclear whether the potential victims will receive reimbursement.

While the accounts will remain frozen, the court has provided Cotton with a narrow lifeline, allowing him to withdraw up to $800 per week for living needs. Cotton and First Mutual may also draw on the frozen funds for legal fees. However, they must provide ASIC with a 5-day notice. The authority noted it would provide investors with additional information as soon as the investigation allows.

ASIC is now extending the scope of its inquiries to include transactions dating to before March 2024. Such a move implies that the alleged diversion of investor funds could have been taking place for longer than initially thought. However, ASIC remains tight-lipped for now, as releasing unnecessary information could jeopardize its investigation.