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”.
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.
AUTHOR
Laura Dew
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