Australia’s corporate regulator has imposed temporary stop orders on two investment options offered under the La Trobe Australian Credit Fund, citing shortcomings in their target market determinations.
The Australian Securities and Investments Commission said the 12 Month Term Account and 2 Year Account failed to set out an appropriate target market. It is concerned the documents point investors towards an unsuitable level of portfolio allocation relative to the fund’s risks and do not set adequate distribution conditions.
Under the interim orders, La Trobe Financial Asset Management Limited is prevented from dealing in interests, issuing a product disclosure statement for, or providing general financial product advice to retail clients recommending an investment in the two products. The orders run for 21 days unless lifted earlier.
ASIC said the action forms part of a surveillance program of retail private credit, examining transparency, governance, valuation practices, management of conflicts and the fair treatment of investors, undertaken as part of its broader response to developments in Australia’s capital markets.
The La Trobe Australian Credit Fund offers seven investment accounts with differing terms, yields and features. The two affected accounts are invested almost entirely in loans secured by registered first mortgages, with small cash and term deposit holdings to meet liquidity needs. They are not bank deposits, returns are not guaranteed and depend on income generated by the underlying assets, and withdrawals are subject to conditions. According to the product disclosure statement, the fund managed $11.605 billion as at 30 September 2024. La Trobe’s website describes the firm as one of the country’s leading alternative asset managers with $20 billion under management and more than 120,000 investors.
Design and distribution obligations require issuers and distributors to ensure target market determinations clearly define who a product is suitable for, accurately describe its risks and features, and set appropriate distribution controls. Since the regime commenced, ASIC has made 91 interim stop orders and one final stop order.
