La Trobe fund hit with $750k penalty

Accusations of false and misleading marketing have seen the Federal Court exact a heavy toll on a major fund.

La Trobe Financial Asset Management has been ordered to pay a $750,000 fine by the Federal Court after being accused of false and misleading marketing by the Australian Securities and Investments Commission (ASIC).

In his decision on the matter, Justice O'Bryan said that the conduct of the fund 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.”

The court found that La Trobe’s use of the word stable across its advertising in newspapers, magazines and on websites implied that there could be no loss of capital by investors, and that this constituted a misrepresentation of the risk involved with the fund.


Justice O'Bryan also took issue with La Trobe’s claim that investors in the fund’s “48 Hour Account” and “90 Day Account” would be able to withdraw their funds between 48 hours and 90 days of providing withdrawal notice.

In reality, the fund had up to 12 months to satisfy a withdrawal request and, should the fund cease to be liquid, investors were only entitled to a withdrawal in the event that such an offer was made by La Trobe.

ASIC asserted that La Trobe’s statements about the fund failed to express in “a sufficiently prominent manner” the level of risk associated with it.

ASIC deputy chair Karen Chester said that consumers need to be provided with accurate information that doesn’t mislead them. 

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, she said.

Ms Chester pointed to ASIC’s True-To-Label Initiative and warned funds not to leave out or omit essential details for any financial product or service.

When consumers are considering investments, they need to be provided with accurate information that doesn’t mislead them,” she said.

“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 fund hit with $750k penalty
ifa logo

Subscribe to the ifa bulletin

Receive daily online news,analysis, reports and business strategies
By signing up you agree to our Terms of Use and Privacy Policy

Website Notifications

Get notifications in real time and stay up to date with content that matters to you.