La Trobe fined for misleading investors in $5b fund

La Trobe Financial Asset Management has been fined $750,000 for false and misleading marketing of its Australian Credit fund.

The Federal Court ruled La Trobe’s advertising in newspaper, magazines and websites included statements that any capital invested would be ‘stable’.

The Australian Securities and Investments Commission (ASIC) said “this gave the impression there could be no loss of capital and that La Trobe failed to express in a sufficiently prominent manner that a person who invested in the fund could, in fact, lose substantial amounts of capital invested”.

Related News:

The La Trobe Australian Credit fund was over $5.15 billion in assets under management.

This was one of two failures by La Trobe as the court also found it made false or misleading representations that investors in its 48 hour account and 90 day account would be able to withdraw their funds between 48 hours and 90 days of providing withdrawal notice whereas:

  • La Trobe had up to 12 months to satisfy a withdrawal while the fund was liquid;
  • If the fund ceased to be liquid, investors were entitled to withdraw only when a withdrawal offer was made by La Trobe.

In his decision, Justice O’Bryan stated: “The misleading conduct was serious and had very considerable potential to mislead the public about the characteristics of the investment options – both as to the entitlement to withdraw funds and the risk of loss of capital invested.

“Each of the representations was made over periods ranging from about one year to more than three years, in a variety of different media that were all accessible by the general public. Further, the misleading conduct potentially affected investment decisions involving very large sums of money.”

ASIC deputy chair, Karen Chester, said, “When consumers are considering investments, they need to be provided with accurate information that doesn’t mislead them. ASIC was concerned that these investment products were being sold as stable and more liquid when they were not, and essential detail was being left in the fine print”.

La Trobe, as the responsible entity of the Fund, was ordered to pay ASIC’s costs. The Court acknowledged La Trobe’s consent to the declarations of liability and pecuniary penalty.




Recommended for you

Author

Comments

Comments

Agreed that La Trobe should have been pulled up and fined.
Now ASIC, given Industry Super Funds have so called Balanced Funds with 94% Growth Assets, as per the APRA Govt heat map.
When will ASIC pull up Industry Super Funds for misleading labelling products ?
When will ASIC stop the misinformation that could be seriously detrimental to Super members?
Oh of course ASIC won’t do anything, it’s Industry Super, you know the unregulated, do whatever you want Industry Super.
ASIC are a sick, sick, regulatory captured, corrupt regulator.

Still waiting for Super funds to be fined for advertising their fees are "only" $1.50 per week....that they have "Balanced" funds that need to be bailed out by the RBA with 80% plus in market linked investments,... use performance figures to suit themselves. Not to mention Private Credit paying 8% are considered defensive and being ranked and compared to AAA+ bond fund paying 2%, and Brisbane Airport is considered a defensive asset. One month performance figures are advertised, the next month during poor performance they disappear, and the double digit boom period stays on their sites often two years after the event.

I would never invest with La Trobe as I have known some of the people they have lent money to for property developments - i.e. not low risk.
I also agree regarding Industry Super funds and their use of the word 'balanced' as well as their habit of reporting property as a defensive asset (or at least in part defensive).
Two sets of rules. Advisers could never get away with what these huge businesses get away with.

I don't know the intricacies of what La Trobe's advertising was, but being called misleading for using the word 'secure'?
I would have thought if your investors capital has never gone backwards in 19 years and you'vge always repaid it when it's due, then you probably have a better claim than most in being able to use the word. Find me another investment with that track record, other than a bank account, and I'll probably start using it. Maybe 'stable' would be a better description, but geez, I would have thought there are some far worse cases going around than that for ASIC to spend their time and our money on.

It's a mortgage fund, full of high-risk loans. I have no problem with people investing in it and advisers putting client money into it as part of a diversified mix. But don't kid yourself, La Trobe funds are not 'secure' and they are not liquid. ASIC is right on this, but agree there are worst cases which ASIC continue to ignore.

Financial crime gets wet lettuce punishment because political donors manipulate our putrid Westminster clone to benefit themselves.

Unfortunately this is the same across the entire globe. Both sides of the political divide are captive. The world is decades deep into repeating the same mistakes centuries apart.

No alternate can compete. Disgraceful.

"ASIC was concerned that these investment products were being sold as stable and more liquid when they were not, and essential detail was being left in the fine print”

Karen Chester, take a look at Industry Super, it's exactly the same! Why don't you do something about that? Is it because ASICS super is with Aus Super? do something!

Add new comment