La Trobe Financial Asset Management has received Federal Court orders instructing it to pay an Australian Securities and Investments Commission (ASIC) penalty of $750,000 for producing false or misleading marketing material.
The fine relates to advertising the manager took out in newspapers, magazines and on websites associated with the La Trobe Australian Credit Fund.
In particular, ASIC claimed promotional statements that the fund was “stable” intimated investors in the offering would be protected against capital losses when this was not the case.
On this count, the court found in favour of the corporate regulator, concurring the statement in question was false or misleading.
Further, it also judged representations investors in the manager’s 48 Hour Account and 90 Day Account had the ability to withdraw their funds between 48 hours and 90 days of providing withdrawal notice as false or misleading. This finding was based on the fact La Trobe had up to 12 months to satisfy a withdrawal while the fund was liquid and investors were entitled to withdraw only when a withdrawal offer was made by the manager if the product ceased to be liquid.
“The misleading conduct was serious and had very considerable potential to mislead the public about the characteristics of the investment options – both as to the entitlement to withdraw funds and the risk of loss of capital invested,” Justice O’Bryan said in handing down the decision.
“Each of the representations was made over periods ranging from about one year to more than three years, in a variety of different media that were all accessible by the general public. Further, the misleading conduct potentially affected investment decisions involving very large sums of money.”
ASIC deputy chair Karen Chester stressed the importance for consumers to receive accurate information when considering investing in a financial product.
“ASIC was concerned that these investment products were being sold as stable and more liquid when they were not, and essential detail was being left in the fine print,” Chester said.
“This case serves as yet another warning that ASIC will take action where investments are marketed to consumers as safer, lower risk or more liquid when they are not.”
La Trobe consented to the penalty as well as an order to pay ASIC’s costs incurred as a result of the action.
In December last year, the manager confirmed it had previously been in discussions with the regulator about the claims over the alleged irregularities regarding its marketing of the Australian Credit Fund.