The Federal Court ordered La Trobe Financial Asset Management (La Trobe) to pay a fine of $ 750,000 for the false and deceptive marketing of La Trobe Australian Credit Fund (the Fund).
Advertising of La Trobe in newspapers, magazines and on websites contained statements that any capital invested in the Fund would be “stable”. ASIC claimed that this gave the impression that there could be no loss of capital and that La Trobe had not made it sufficiently clear that a person who had invested in the Fund could, in fact, lose substantial amounts of invested capital.
The Court considered that the statement that any capital invested in the Fund would be “stable”, in the sense that there would be no risk of substantial loss of such capital, was a false or misleading representation.
The Court also found that La Trobe had made false or misleading statements that investors in his 48 Hour Account and 90 Day Account would be able to withdraw their funds between 48 hours and 90 days after providing a withdrawal notice then than :
- La Trobe had up to 12 months to satisfy a withdrawal while the Fund was liquid;
- if the Fund ceased to be liquid, investors only had the right to withdraw when a withdrawal offer was made by La Trobe.
ASIC Vice President Karen Chester said: “When consumers are considering investments, they should be provided with specific information that does not mislead them. ASIC was concerned that these investment products might be sold as stable and more liquid when they were not, and key details were left in fine print. ‘
ASIC’s True to Label initiative has identified promotional material from a number of funds that could mislead investors. ASIC is concerned about this type of misconduct, especially when investors seek yield in a low-interest economy. Advertising is misleading when products are described as less risky when, in fact, investors could lose some or all of their investment.
“This case is yet another warning that ASIC will take action when investments are marketed to consumers as safer, lower risk or more liquid when they are not,” said the vice president of ASIC, Karen Chester.
In his ruling, Justice O’Bryan said that “the deceptive conduct was serious and was likely to significantly mislead the public about the characteristics of investment options – both with regard to the right to withdraw funds. and the risk of losing invested capital.
Each of the performances was done over periods ranging from about one year to over three years, in a variety of different media which were all accessible to the general public. In addition, the deceptive conduct has potentially affected investment decisions involving very large amounts of money, ‘
La Trobe, as the entity responsible for the Fund, was ordered to pay ASIC’s costs. The Court recognized La Trobe’s consent to the statements of liability and pecuniary penalty.