ASIC tightens disclosure rules for agricultural MISs
The Australian Securities and Investments Commission (ASIC) has moved to tighten the rules around agricultural Managed Investment Schemes (MIS), with promoters being required to make investors more aware of the risks associated with such products.
ASIC this week released an investor guide and regulatory guidance which incorporate new disclosure benchmarks, saying the risks associated with agricultural MIS products had been highlighted since 2008 when several operators failed, causing significant investor losses.
ASIC senior executive leader investment managers and superannuation, Ged Fitzpatrick, said the new disclosure benchmarks were one component of a multi-faceted approach to holding the gatekeepers in the sector to account.
"Our initial focus was on surveillance of the sector when problems emerged, and our investigations into the collapses of a number of agribusiness responsible entities are continuing," he said.
The magnitude of agricultural MIS were revealed in ASIC's Regulatory Impact Statement, in which the regulator estimated that, since the introduction of the managed investments regime in 1998, agribusiness schemes have raised over $8 billion.
It said that in the past seven years over $5 billion has been invested in agribusiness schemes by over 75,000 investors. Of this, forestry schemes represented $3.7 billion and non-forestry schemes represented $1.3 billion.
ASIC has published a number of benchmarks to be followed by promoters of agricultural MIS, based on a disclosure model that requires that they identify, for a particular financial product, the key risk areas potential investors should understand before making a decision to invest.
It encourages a responsible entity to disclose those key risks, and the details underlying the key risks.
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