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How safe are your investment funds?


How safe are your investment funds?

The Shine Lawyers' Professional Negligence team has a timely reminder for ordinary Australians looking to invest their hard earned savings.

Managed funds - no matter how professionally they are packaged and marketed - must be treated with extra caution. The big banks are very tightly regulated but managed super funds are not.

Often people make the mistake of thinking they are dealing with a bank or a credit union when in fact it is a mortgage fund that carries much greater risk.

Recently, the Australian Securities and Investments Commission (ASIC) has issued a stop order on Product Disclosure Statements issued by Theta Asset Management Limited (Theta) for investments in the Sterling Income Trust.

The Stop Order relates to Product Disclosure Statements issued for the following investment options in the Sterling Income Trust:

  • Development Units dated 20 May 2016;
  • Income Units & Growth Units dated 31 January 2017; and
  • Management Company Units dated 20 May 2016.
Under the Corporation Act 2001, the issuer of an investment product must give potential investors a Product Disclosure Statement which contains all the key information about the product.

Disclosures allow investors and their advisors to determine whether the investment is right for them.  Inadequate disclosure could result in investors purchasing investments that they otherwise would not have bought.  Accordingly, there are strict requirements regarding the information that must be included in a PDS.

The problem is that not everyone is fluent at comprehending disclosure statements and identifying risks, especially around financial operations.

ASIC made the Stop Order recently on Product Disclosure Statements issued by Theta Asset Management Limited for investments in the Sterling Home Trust due to concerns that a number of PDSs issued by Theta:

  1. Inadequately disclosed the risks in the investment;
  2. Inadequately disclosed conflicts of interests;
  3. Omitted material information about the investments;
  4. Presented prospective information about target returns; and
  5. Contained outdated and incorrect references.
While the Stop Order is in place, no offers, issues, sales, or transfers of interest in the Sterling Income Trust can be made under the relevant PDS.

Investors in the Sterling Income Trust are invited to contact Shine Lawyers’ Professional Negligence team for a free consultation regarding their rights to claim compensation.

Retirees are generally those who get caught up in higher risk managed investment schemes and there have been far too many cases where hard workers have lost their entire life savings.

Working tirelessly to secure a comfortable retirement only to be ripped off in your later years can have devastating consequences for families.

Written by Shine Lawyers on October 4, 2017. Last modified: August 31, 2018.

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