ASIC accepts EU from Aurora
The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking (EU) from Aurora Funds Management Ltd (Aurora) as part of the regulator’s wider surveillance of the hedge fund sector.
Aurora, the responsible entity (RE) of numerous Australian Securities Exchange (ASX)-listed managed investment schemes was found by ASIC to have a number of failings in its practice of making on-market acquisitions and disposals of units in the schemes.
Between 2007 and 2013, the RE was found to have more than 3000 instances of acquiring units on market in four of its Aurora-badged managed investment schemes, with ASIC concerned it did not comply with multiple ‘substantial holdings’ disclosure obligations.
In 2013, Aurora breached the 20 per cent prohibition in respect of one of its listed funds.
Aurora was not complicit with ASIC’s Class Order [CO 07/422] issued in 2007 for on-market buy-backs by ASX-limited schemes to regulate on-market buy-backs by REs of units in their listed schemes, having only issued a single partly-paid preference unit in each of the listed schemes, the RE sidestepped the compliance requirement.
As part of its EU with ASIC, Aurora will cancel or redeem all relevant units (and provide evidence of this to ASIC), ensure that its listed schemes have no more than one class of unit and therefore have to comply with [CO 07/422], in future, will only acquire or dispose of units in accordance with [CO 07/422], and provide such information or documents as ASIC requires to assess Aurora’s ongoing compliance with this EU.
Commissioner Greg Tanzer said: “ASIC established a regime in [CO 07/422] to facilitate on-market buy-backs of units in listed funds by their REs…If Aurora had followed the class order regime, these issues are unlikely to have arisen”.
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