ASIC initiates action against La Trobe
La Trobe Financial Asset Management has become the subject of civil action initiated by the Australian Securities and Investments Commission (ASIC) relating to its La Trobe Australian Credit Fund.
The regulator announced today it had commenced civil penalty proceedings in the Federal Court against La Trobe Financial Asset Management Ltd in its capacity as the responsible entity of the La Trobe Australian Credit Fund.
The ASIC announcement noted that the Fund invests in loans secured by first mortgages over residential and commercial real estate, as well as cash, deposits and other assets.
La Trobe offers several different investment options to members of the Fund, including:
- an option previously known as the ‘48 hour Account’ or the ‘Classic 48 hour Account’ (48 Hour Account), and
- the ‘90 Day Notice Account’ (90 Day Account).
ASIC is alleging La Trobe marketed the Fund throughout Australia in ways that were misleading or deceptive, or likely to mislead or deceive.
It said this marketing included advertising in newspapers and magazines, on television and radio, and on its website (www.latrobefinancial.com.au).
Specifically, ASIC alleges La Trobe represented that:
- consumers who invested funds in the 48 Hour Account would be entitled to withdraw their funds within 48 hours of giving a withdrawal notice to La Trobe; and
- consumers who invested funds in the 90 Day Account would be entitled to withdraw their funds within 90 days of giving a withdrawal notice to La Trobe.
ASIC alleges the actual rights of members to withdraw from the Fund ranged from no right to withdraw through to a right to request a withdrawal that La Trobe had up to 12 months to satisfy.
ASIC also alleges La Trobe represented that:
- any capital invested in the Fund would be ‘stable’, in the sense there was no risk of substantial loss of capital, when in fact there was a risk of substantial loss of capital; and
- an investment in the Fund would provide a specified rate of return when in fact none of the investment options in the Fund were guaranteed to provide any particular rate of return.
ASIC is seeking declarations, pecuniary penalties and corrective advertising orders against La Trobe.
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