ASIC and Aurora lock horns over responsible entity change

The Australian Securities and Investments Commission (ASIC) has entered a change of the responsible entity for the Aurora Absolute Return Fund (ABW) in its record of registration for the fund, despite submissions made by Aurora Funds Management to the contrary, with the latter refusing to hand over the fund’s assets and records until a Court rules on the matter.

Aurora Funds Management, in its capacity as the responsible entity of the ABW, told the ASX that the change in record did not determine the validity of the purported change of responsible entity. That would depend on the determination of the validity of a purported general meeting two weeks’ ago and the business transacted at that meeting, a matter which Aurora would apply to the courts to solve.

Firing shots against Primary Securities Ltd, which was identified by ASIC as the new responsible entity, Aurora said that the application would be made “in light of the confusion caused by Primary’s conduct”.

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Aurora maintained that the meeting was not properly called and held and that the resolutions made at it had no legal effect. It said that that position was “not affected in any way by the acts in ASIC in entering a change in responsible entity in its record of registration for the fund”.

“The current lack of clarity concerning the position of the responsible entity of the Fund will therefore continue until the matter is determined by the court,” Aurora’s ASX announcement said.

This was not Aurora’s first issue with ASIC, as the regulator had been investigating the misappropriation by Aurora’s former CFO, Betty Poon, of $1 million of investor funds from the Aurora Property Buy-Write Income Trust for many months. While the company repaid the $1 million at ASIC’s intervention, the regulator remained concerned that the misappropriation and Aurora’s failure to detect it occurred because of deficiencies in Aurora’s corporate governance and risk management frameworks.

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