ASIC commences proceedings against Macquarie
The Australian Securities and Investments Commission (ASIC) has commenced proceeding against Macquarie Investment Management (MIML) for the investment of $30 million into a Cayman Islands based fund made in 2012 by van Eyk Blueprint International Shares fund (VBI Fund) for which Macquarie was the responsible entity.
Both ASIC and MIML have agreed that MIML failed to comply with its duties as a responsible entity which includes:
- Failing to adequately address risks associated with the decision for the VBI Fund to make three investments into a Cayman Islands based fund, Artefact Partners Global Opportunities Fund (Artefact) between July and October, 2012;
- Allowing members to redeem or withdraw units from the VBI Fund when it was illiquid in contravention of the Corporations Act and the scheme's constitution between June 2013 and September 2013; and
- Failing to make adequate and timely enquiries in relation to van Eyk's monitoring of the VBI Fund's investment in Artefact between February 2013 and July 2014;
The Supreme Court of New South Wales is expected to hear joint submissions from ASIC and MIML and will determine the final penalty amount.
ASIC said it had acknowledged the efforts made by MIML to have the investors' funds repaid.
In August 2014, MIML terminated the VBI Fund with unitholders owed around $30.9 million relating to Artefact investments and since then Artefact has repaid $20 million to the VBI Fund, with MIML recently paying the remaining $10.9 million plus interest to unit holders.
It is currently expecting to further recover the majority of that amount from Artefact's liquidator.
MIML also suspended redemptions form the VBI Fund and three other funds due to their exposure to the VBI Fund.
ASIC is also currently conducting an ongoing investigation into van Eyk Research, the entity MIML appointed as the investment manager of the VBI Fund, which went into liquidation in 2014.
MIML also stressed that by April 2015, it had returned to investors approximately 89 per cent of funds in the VBI fund, with the balance of these proceeds last month being returned to VBI investors, resulting in a 102.2% return on VBI's unit value at termination.
"ASIC and MIML have agreed in today's statement that, as Research Entity, MIML did not exercise sufficient care and dillignce in relation to van Eyk's decision to invest in Artefact, the ongoing monitoring of van Eyk in relation to Artefact, and VBI's liquidity,"
"This matter arose within MIML's non-sore outsourced Responsibly Entity business which MIML is no longer pursuing," MIML said in a statement.
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