ASIC has suspended the Australian financial services licenses of Sydney-based Theta Asset Management and Valuestream Investment Management and commenced action in the Federal Court in Western Australia, focused on the promotion and management of the Sterling Income Trust.
Theta is the parent entity and related party of Valuestream Investment Management.
The licenses have been blocked until 21 July, with ASIC citing the two entities have been placed into external administration.
The claim has been placed against Theta Asset Management, an AFSL and responsible entity of Sterling Income Trust, along with Theta director Robert Patrick Marie.
According to ASIC, Theta and Mr Marie were responsible for authorising the issue of five product disclosure statements for the Sterling Income Trust, failing to ensure that each of them was not defective.
In particular, they were said to fail to ensure they did not contain misleading or deceptive statements and omissions in respect to statements and information required to be disclosed.
ASIC also stated that contrary to the compliance plan that Theta issued for the Sterling Income Trust, the entity:
Issued five defective product disclosure statements for the Sterling Income Trust;
failed to take all steps necessary to effectively monitor the performance of Sterling Corporate Services Pty Ltd (SCS) as the investment manager of the Sterling Income Trust and satisfy itself that SCS had carried out its contractual obligations adequately;
failed to identify, document, assess, evaluate and effectively manage and control all conflicts of interest; and
failed to ensure all financial statements of the Sterling Income Trust were completed and available for audit within two months of the relevant period and were lodged with ASIC on or before the lodgement date.
In total, between 20 May 2016 and 30 May, $16,749,974 was raised from retail investors pursuant to the alleged defective product disclosure statements.
ASIC is seeking declarations of breach against Theta and Mr Marie for various alleged breaches of the responsible entity and director’s duties provisions of the Corporations Act 2001.
It has specified that they failed to exercise appropriate care and diligence when issuing each of the relevant product disclosure statements.
Source: Investor Daily