The Australian Securities and Investments Commission (ASIC) has announced the start of Federal Court action over the promotion and management of the Sterling Income Trust.
Just hours after a trading halt surrounding Theta Asset Management, the Australian Securities Exchange (ASX), ASIC announced that its action was against Theta and a director of Theta, Robert Patrick Marie.
The regulator said it would be alleging that Theta and Marie were responsible for authorising the issue of five Product Disclosure Statements (PDSs) for the Sterling Income Trust while failure to ensure that each of them was not defective and that, in particular, they did not contain misleading or deceptive statements and omissions in respect to statements and information required to be disclosed.
ASIC also alleges that contrary to the compliance plan that Theta issued for the Sterling Income Trust, Theta:
- issued five defective Product Disclosure Statements for the Sterling Income Trust;
- failed to take all steps necessary to effectively monitor the performance of Sterling Corporate Services Pty Ltd (SCS) as the investment manager of the Sterling Income Trust and satisfy itself that SCS had carried out its contractual obligations adequately;
- failed to identify, document, assess, evaluate and effectively manage and control all conflicts of interest; and
- failed to ensure all financial statements of the Sterling Income Trust were completed and available for audit within two months of the relevant period and were lodged with ASIC on or before the lodgement date.
ASIC said it was seeking declarations of breach against Theta and Marie for various alleged breaches of the responsible entity and director’s duties provisions of the Corporations Act 2001, including that they failed to exercise appropriate care and diligence when issuing each of the relevant Product Disclosure Statements.
The regulator said it was also seeking civil penalties against Theta and Marie, and an order banning Marie from managing corporations for such period as the Court deems fit.
ASIC noted that the alleged breaches of section 601FC of Act by Theta and breaches of 601FD by Marie each carry a maximum possible pecuniary penalty of $200,000.
It said that, in total, between 20 May 2016 to 30 April 2018, $16,749,974 was raised from retail investors pursuant to the alleged defective Product Disclosure Statements.
ASIC’s said its investigation was ongoing into other conduct by entities and officers within the Sterling Group of companies.