The Federal Court has penalised La Trobe Financial Asset Management $750,000 for false and misleading marketing of the La Trobe Australian Credit Fund.
The Fund is an unlisted registered managed investment scheme with over $5.15 billion in Assets under Management and over 45,000 investors.
The Court took action late in 2020 in response to La Trobe’s advertising in newspapers, magazines and on websites, which included statements that any capital invested in the Fund would be ‘stable’. ASIC claimed that this gave the impression there could be no loss of capital and that La Trobe failed to express in a sufficiently prominent manner that a person who invested in the Fund could, in fact, lose substantial amounts of capital invested.
The Court found that the statement that any capital invested in the Fund would be ‘stable’, in the sense of there being no risk of substantial loss of that capital, was a false or misleading representation.
The Court also found that the company made false or misleading representations that investors in its 48 Hour Account and 90 Day Account would be able to withdraw their funds between 48 hours and 90 days of providing withdrawal notice whereas:
- La Trobe had up to 12 months to satisfy a withdrawal while the Fund was liquid;
- if the Fund ceased to be liquid, investors were entitled to withdraw only when a withdrawal offer was made by La Trobe.
Also Read: Stagflation Looms: Investing In The Great Transformation
ASIC Deputy Chair Karen Chester said, “When consumers are considering investments, they need to be provided with accurate information that doesn’t mislead them. 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.”
La Trobe, as the responsible entity of the Fund, was ordered to pay ASIC’s costs. The Court acknowledged La Trobe’s consent to the declarations of liability and pecuniary penalty.
