ASIC intervenes in LM fund court proceedings
The Australian Securities and Investments Commission (ASIC) has sought court orders that LM First Mortgage Income Fund be wound-up after its collapse earlier this year.
Appearing in the Queensland Supreme Court, the regulator also sought orders that registered liquidators from PriceWaterhouseCoopers be appointed as the receivers to wind up the fund.
The proceedings were started by two investors of the fund seeking orders for the appointment of Trilogy Funds Management as responsible entity. Current responsible entity, LM Investment Management, opposed this application.
ASIC Commissioner Greg Tanzer said that the regulator sought orders to appoint receivers, as it “will allow the winding-up to proceed in the most efficient and cost effective way to provide the best chance of achieving the maximum return for investors”.
“As such, ASIC believes that the persons responsible for winding-up the FMIF [First Mortgage Income Fund] should be appropriately independent,” he said.
Prior to the proceeding in the Supreme Court, Deutsche Bank, a secured creditor of the fund, appointed McGrathNicol as receiver of the FMIF.
ASIC stated that it proposes that the incoming receivers, if appointed, work in conjunction with Deutsche Bank’s receiver for an orderly realisation of the assets of FMIF.
LM Investment Management is currently responsible entity for seven registered managed investment schemes including LM Cash Performance Fund and the unregistered LM Managed Performance Fund.
In April this year, ASIC suspended LM’s Australian financial services licence for two years to allow voluntary administrators FTI Consulting to provide financial services including winding up registered MISs operated by LM.
ASIC has since set up a web page for investors and unit holders affected by the fund collapse.
“It is ASIC’s view that the protracted litigation surrounding the FMIF is not in the best interests of investors and it wishes to see the matter resolved as soon as possible.”
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