Julie and Damian are brother and sister. Julie is a lawyer and works for a large investment fund manager advising on legal entities and ownership structures. During her career she has built up a portfolio of shares ($1.5 million) and property ($3.2 million). Her current debt is $1.3 million and she earns $260,000 per year. Damian is an artist who works on large installations. His income is varied and lumpy with large commissions taking him up to three years to finalise and to receive payment. Five years ago, he was commissioned for a $2 million large trout gateway to a seaside location, which is yet to be fully installed. He rents his seaside home but moves to wherever the work is required. Their aunt Grace has left her estate to them. It consists of a house valued at $620,000 and shares valued at $5 million. Julie and Damian have agreed that rather than sell the house and incur the associated costs, Damian will move into the house rent free with a lifetime tenancy. They have updated their wills so that if Damian should die the house will become Julies; and if Julie were to die the house will become Damians. In return, Julie is going to manage the share portfolio of $5 million. For income tax purposes the share portfolio will be placed into a trust with Julie and Damian trustees as well as beneficiaries. They have an investment plan that the income will be distributed to Damian during the lean years, and re-invested into the portfolio during his good times. Their long-term plan is to repay Julies debt when she is ready to retire. They have named the trust: The Aunt Grace Trust.

(a) Identify one (1) of the parties Julie, Damian or the Aunt Grace Trust who qualifies as a wholesale investor. Support your answer by referencing the relevant criteria which qualifies them as a wholesale investor. (1 mark)

(b) Briefly explain the warnings a financial product offeror must provide to a wholesale investor. (1 mark)

(c) Describe the type of conduct expected from a financial adviser when dealing with a wholesale investor. (1 mark)

(d) What two (2) types of certification does a financial adviser need to provide to the product offeror in order to confirm the wholesale investors status? (1 mark)

(e) Briefly describe the consequences of certifying that an individual is an eligible investor when they do not meet the criteria of a wholesale investor. (1 mark)