ASIC’s intervention pace on Sterling was ‘reasonable’
In hindsight the corporate regulator could have moved more quickly on the Sterling case and done things differently in the circumstances but what it did was “reasonable” according to its chair.
Speaking during a parliamentary hearing, Australian Securities and Investments Commission (ASIC) chair, Joe Longo, said the regulator could have been better at disseminating the media release following the stop order on the Sterling Income Trust product disclosure statement (PDS) in August 2017.
ASIC did not have a broad directions power that would have enabled it to direct Theta to contact existing tenant-investors and general investors and inform them of the defective PDS and their right to complain or seek a refund if they wished to do so.
“With the benefit of hindsight, we could perhaps have moved more quickly once we became aware of the problems with the PDS,” he said.
“But it is important to stress that our judgment at the time remains reasonable, given the organisation’s competing priorities. ASIC does not proactively survey the performance of managed investment schemes, and not every concern raised with us will lead to an action.”
Longo stressed during questioning about ASIC’s pace in the investigation that the regulator did not have any visibility into the investments or when investors signed the leases or put their money into managed investments.
“Right up until the time we commenced the investigation the investors weren't even complaining to us, and then by the middle of 2018 a lot of investors were still seem relatively happy with what they were getting,” he said.
“These situations really require a lot of judgement as to when to intervene and [figuring out] how much you need to have before you intervene. Because it's not uncommon for investors in managed investment schemes to say ‘well, why did you intervene so quickly? That was all going really well. It's your fault ASIC, that this scheme has collapsed’. Alternatively, ‘it's your fault ASIC, that you didn't come in here sooner and stop the scheme’.
“The Sterling situation is tragic but it is part of a much bigger picture. As far as this particular matter is concerned, I think ASIC acted reasonably. We acted reasonably quick with what we had. Could we move more quickly? Probably. Should we maybe have released the media release more energetically? Probably.
“But the investigation, the time it took, the issues we've had to deal with, I think we've handled that reasonably.”
Recommended for you
Perpetual CEO Bernard Reilly says there has been “extensive interest” in the firm’s wealth management division following the termination of the KKR deal with Morningstar stating it will be crucial to achieve the highest possible takeover premium.
Bell Asset Management has welcomed a global investment professional into the newly created director of research and portfolio manager position, while the broader team sees a reshuffle.
Following the recent departure of Paradice Investment Management’s head of retail distribution, the company has made two appointments from Betashares to lead its wholesale distribution function.
‘Ineffective sales methods’ have been cited as the largest barrier to private market investment by APAC wealth managers, according to MSCI, greater than the products’ illiquidity or lack of transparency.
