Trio directors subject to enforceable undertakings

Two former Trio Capital directors have entered into enforceable undertakings with the Australian Securities and Investments Commission (ASIC) with one of the directors entering into a similar undertaking with the Australian Prudential Regulation Authority (APRA).

The directors, Rex Phillpott and Natasha Beck, entered into the enforceable undertaking with ASIC, with Beck also accepting an enforceable undertaking with APRA.

Trio was formerly the trustee of five superannuation entities and the responsible entity for 25 managed investment schemes. These included the Astarra Strategic Fund, comprised of hedge funds that had reported assets of $125 million in December 2009.

The Astarra fund invested in several questionable overseas hedge funds, mostly based in the Caribbean. ASIC raised concerns about the legitimacy of these investments and commenced an investigation in October 2009, and Trio was placed into administration in December that year.

Phillpott was the chief executive officer, director and secretary of Trio from October 2005. He was also on the risk and compliance committee. Phillpott has agreed with ASIC not to act as a director of any corporation or in any role within the financial services industry for 15 years.

Beck was non-executive director of Trio from June 2008 and was a member of the investment committee from September 2009. She has agreed with ASIC not to act in any role within the financial services industry for two years. She has also agreed not to act as director of any corporation for two years, with the exception of Rumi Holdings, a company of which she is the sole shareholder.

Beck has also acknowledged APRA’s concerns that she failed to carry out her duties properly as director of a superannuation trustee. She has further recognised the five-year disqualification period deemed to be fitting by APRA for the nature and extent of the concerns.

During this time, Beck would not be permitted to act as a trustee or as a responsible officer of a body corporate that is a trustee, investment manager or custodian of an APRA-regulated superannuation entity.

However, as Beck sought to resolve APRA’s concerns at an early stage and has agreed to cooperate with the investigation, APRA has agreed to accept her undertaking to remain out of the superannuation industry for four years. She may also be entitled to reduction of two years, subject to her continued assistance with the investigation.

The current enforceable undertakings follow the guilty plea of former Astarra Strategic Fund director and investment manager Shawn Richard. Richard is currently on bail awaiting sentence.

The Astarra fund wound up in April 2010, under a NSW Supreme Court order. Since this time this liquidator of Trio has been unable to recover the vast majority of the investments made by the fund.