ASIC today initiated civil sanction proceedings in the Federal Court against La Trobe Financial Asset Management Ltd (La Trobe) as the entity responsible for the La Trobe Australian Credit Fund (the Fund).
The Fund invests in loans secured by first mortgages on residential and commercial real estate, as well as cash, deposits and other assets.
La Trobe offers several investment options to Fund members, including:
- an option previously known as the â48-hour accountâ or âClassic 48-hour accountâ (48-hour account), and
- the â90-day notice accountâ (90-day account).
ASIC alleges that La Trobe has marketed the Fund throughout Australia in a manner that is deceptive or deceptive, or likely to mislead or deceive. This marketing included advertising in newspapers and magazines, on television and radio, and on its website (www.latrobefinancial.com.au). Specifically, ASIC alleges that La Trobe stated that:
- consumers who have invested funds in the 48 Hour Account would be entitled to withdraw their funds within 48 hours of notification of a withdrawal notice to La Trobe; and
- consumers who invested funds in the account 90 days would be entitled to withdraw their funds within 90 days of sending a withdrawal notice to La Trobe.
ASIC alleges that the members’ real rights to withdraw from the Fund ranged from the lack of a right of withdrawal to a right to request a withdrawal that La Trobe had up to 12 months to satisfy.
ASIC also alleges that La Trobe stated that:
- any capital invested in the Fund would be âstableâ, in the sense that there was no risk of a substantial loss of capital, when in fact there was a risk of a substantial loss of capital; and
- an investment in the Fund would provide a specified rate of return when in fact none of the Fund’s investment options were guaranteed to provide a particular rate of return.
ASIC is asking for declarations, financial penalties and corrective publicity orders against La Trobe.
The date of the first case management hearing has not yet been set by the Court.
La Trobe holds an Australian Financial Services License under which it is authorized, among other things, to operate registered managed investment programs.
The Fund’s product disclosure statement states that it is authorized to hold a mixture of mortgage assets, cash, notes and other assets. The Fund is an unlisted registered managed investment system with over $ 5.15 billion in assets under management and over 45,000 investors.
A person can acquire a participation in the Fund (and thus become a member of the Fund) by making an investment in the Fund. The minimum investment is currently $ 10.
The Fund’s Articles of Association dated December 24, 2004 set out the rights of members to withdraw from the Fund. Before August 3, 2020, members of the Caisse could only withdraw from the 48-hour Account and the 90-day Account:
- (when the Fund was liquid) by giving a withdrawal notice to La Trobe, which La Trobe was required to satisfy within 12 months of receipt of the notice; Where
- (when the Fund was illiquid) if La Trobe made a current withdrawal offer, in which case Members had the right to withdraw a portion in accordance with the terms of that withdrawal offer. Otherwise, a member may not have the right to withdraw funds invested in either investment option.
In certain circumstances, whether the Fund is liquid or not, La Trobe was entitled, under the constitution of December 24, 2004, to settle withdrawals only proportionally according to a formula based on the amount of cash available in the Fund to satisfy withdrawals.