ASIC puts stop order on ‘deceptive’ managed fund ads

On Friday, ASIC announced it had placed a stop order on advertisements that contain misleading or deceptive statements about a class of units in the RES Investment Fund.

The interim stop order prevents Responsible Entity Services (RES) — the responsible entity of the fund — from advertising or publishing any statement about PPM Units that suggests an investor will acquire equity in Pleasure Point Mine Pty Ltd (PPMPL), a related entity of RES.

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ASIC stated that “misleading or deceptive” statements were identified in an online ad for PPM Units in its recent examination of the marketing and disclosure of the RES Investment Fund.

“ASIC considers that statements that investors will acquire equity in PPMPL are misleading or deceptive, because they may lead investors in PPM Units to believe that they will receive shares and/or a direct-ownership interest in PPMPL,” the corporate regulator said.

“The statements are not consistent with the description of the PPM Units in product disclosure statements for the fund and PPM Units.”

ASIC noted that the sole underlying asset of the PPM Unit class in the managed fund is a loan to PPMPL. 

The stop order will remain valid for 21 days unless revoked earlier. ASIC also said that it may consider further regulatory action in relation to the fund and RES.

During the past year, the corporate regulator has taken enforcement action for misleading or false against both Mayfair 101 and La Trobe Financial Asset Management. 

The Mayfair 101 Group was ordered to pay a combined penalty of $30 million for misleading advertising in December last year, while La Trobe was hit with a $750,000 penalty last November for false and misleading marketing.

Earlier this year, the regulator commenced a surveillance into the marketing of managed funds to identify “misleading performance and risk representations” in promotional material.

“ASIC remains concerned that managed fund promoters continue to target consumers, particularly retirees or those planning for retirement, with ambiguous or misleading performance and risk representations,” ASIC deputy chair Karen Chester said in March.

“Where we identify fund marketing of concern, we will also review the corresponding product disclosure statements, websites and target market determinations to assess if the marketing claims are misleading.”