The Australian Securities and Investment Commission (ASIC) has taken legal action against La Trobe Financial Asset Management in regards to advertising related to one its funds, alleging it was misleading or deceptive, a claim the manager has rejected.
Late last week, ASIC stated it had commenced civil penalty proceedings in the Federal Court against La Trobe in regards to certain products offered under its Credit Fund, alleging advertising in newspapers and magazines, and on television, radio and the firm’s website was misleading or deceptive, or likely to mislead or deceive.
Specifically, the corporate watchdog alleged La Trobe represented that consumers who invested funds in its 48 Hour Account and its 90 Day Account would be entitled to withdraw their funds within 48 hours and 90 days, respectively, of giving a withdrawal notice to La Trobe, but 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.
It also alleged La Trobe represented that any capital invested in the fund would be “stable” and not at risk of substantial loss of capital, when in fact there was a risk of substantial loss of capital, and investments in the fund would provide a specified rate of return when none of its investment options were guaranteed to provide any particular rate of return.
In responding to ASIC’s claim, La Trobe stated the issues dated back to 2017 and the firm addressed the matter with the regulator at that time.
“La Trobe Financial engaged extensively with ASIC in the second half of 2017 in relation to many of the issues raised in ASIC’s claim and implemented a range of resolution mechanics at that time,” the firm stated in a statement on its website.
“La Trobe Financial rejects the assertions made by ASIC,” it added, stating it believes “our Credit Fund is promoted and positioned as ‘true to label’, and is committed to ensuring that we comply with both the spirit and letter of our legal and regulatory requirements”.
“Since inception in 1999, no investor has ever suffered any loss of principal in any of the Credit Fund accounts referred to in ASIC’s claim. Additionally, we have never withheld a monthly distribution and have met all redemption requests promptly and in full,” it said.
In bringing the legal action, ASIC is seeking declarations, pecuniary penalties and corrective advertising orders against La Trobe, with the date for the first case management hearing yet to be scheduled by the court.
