Bond firm penalised for misleading statements

ASIC has issued two infringement notices to Australian Corporate Bond Company Pty Ltd (ACBC) after it found statements relating to the performance of its exchange-traded bonds (XTB) product were potentially misleading.

The two infringement notices, worth $12,600 each, were issued after the corporate regulator found ACBC had compared the risks of an investment in term deposits and XTBs.

According to ASIC, ACBC stated, in material hosted on its website between May and December 2017, that an investment in XTBs had a similar risk to an investment in term deposits, while producing a higher return.

ASIC said its concern was that the statements were misleading because the risks involved in an investment in XTBs were not equivalent to or substantially the same as an investment in a term deposit.

The regulator highlighted investments in a term deposit of up of $250,000 were protected by the government’s guarantee for authorised deposit-taking institutions, whereas investments in XTBs are not.

The two infringement notices were issued to ACBC on 7 December 2018 and paid on 30 January 2019, and the firm has amended the promotional statements in response to ASIC’s concerns.

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