ASIC gives HFA slap on wrist

TheAustralian Securities and Investments Commission(ASIC) has issued an interim stop order on Hedge Funds of Australia’s (HFA) short form wholesale offering document for the HFA Super Cash Fund, HFA Diversified Investments Fund and HFA Strategic Investments Fund.

The securities watchdog was concerned that despite the funds generating actual performance returns since they commenced trading earlier this year, the prospectuses only included ‘indicative historical investment performance’.

HFA managing director Spencer Young says ASIC contacted HFA on Friday notifying them of the stop order, and the hedge funds manager has since met with the watchdog to iron out any differences. Young says there were four points which ASIC raised which have since been met by HFA.

The first was that although the offering identified the funds as newly established, ASIC wanted corresponding dates published. The next point was concerned with historical performance. ASIC wanted HFA to include a note referring back to the full prospectus where investors will find how the returns are calculated.

Related to this was the third point, that there should have been a note referring investors back to the full prospectus, while the fourth point of contention was that ASIC wanted HFA to include directions to investors on where they can access the investment performance of the funds, which can be found on HFA’s web site.

Young says all these issues have been addressed and have been signed off with ASIC. He expects the group will be re-issuing its amended short form offering document by the end of tomorrow.

While Young welcomed the chance to work through these issues with ASIC, he feels disappointed that ASIC’s action resulted in a stop order.

“The short form is usually used by our wealthy clients or master trust applicants rather than individual retail investors,” he says. “It is a nine page document which is a compressed form of the 48 page prospectus, and its object is to enable these clients to access the information quickly rather than having to wade through the original prospectus.”

He says the full prospectus for the funds have been available to investors since February this year. However, since the interim stop order was announced yesterday afternoon, he has received numerous calls from major investor clients and research houses.

“After we explained what ASIC’s issues were, not one of them had any further concerns about these issues,” he says.

Young says HFA will be issuing a media statement this afternoon outlining its position regarding the interim stop order.