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Thursday, 24 November 2011
Page: 13878

Australian Securities Investments Commission: Managed Investment Schemes

(Question No. 354)

Mr Fletcher asked the Assistant Treasurer, in writing, on 10 May 2011:

In respect of investigations by the Australian Securities Investments Commission (ASIC) into (a) Trio Capital Ltd and its associated managed investment schemes, (b) Storm Financial Ltd, and (c) the Westpoint Group of companies, (i) when did investigations commence, (ii) what prompted the investigations, and (iii) what series of actions were taken by ASIC to prevent each entity from continuing to operate, or continuing to offer financial products.

Mr Shorten: The answer to the honourable member's question is as follows:

As ASIC's investigations and proceedings into the affairs of Storm Financial Limited (Storm), Westpoint Group and Trio Capital Limited (Trio) are continuing ASIC is unable to provide a comprehensive response to all questions in detail.


ASIC formally commenced its investigation in relation to Trio on 2 October 2009 in respect of the Astarra Strategic Fund ('ASF'), of which Trio was the responsible entity. ASIC in taking regulatory action worked closely with the Australian Prudential Regulation Authority as Trio Capital was the trustee of a number of superannuation funds.

On 14 October 2009 ASIC applied to the NSW Supreme Court for orders restricting overseas travel for two directors of the investment manager of the ASF. On 16 October 2009 ASIC placed interim stop orders on the Product Disclosure Statement for the ASF and on 21 October 2009 interim stop orders were placed on three associated Trio superannuation funds. This had the effect of stopping further investments being made into these funds. On 16 December 2009 Trio was placed into voluntary administration. The next day ASIC suspended its Australian financial services license which ensured it was no longer able to provide financial services

On 16 December 2009 APRA suspended Trio as the trustee of four superannuation funds and one pooled superannuation trust. APRA also appointed an acting trustee to manage these five entities.

On 16 April 2010 Justice Palmer in the Supreme Court of New South Wales, on the application of Trio's administrator, ordered the winding up of five managed investment schemes for which Trio was the responsible entity, including the ASF and ARP.


ASIC’s formal investigation commenced on 12 December 2008.

In the months of October, November and December 2008 the stock market fell significantly resulting in a shortfall between the equity and margin loans for Storm clients. Around 18 December 2008, following the commencement of its investigation, ASIC sought to negotiate an enforceable undertaking (EU) with Storm. The purpose of the EU was to address ASIC’s concerns that Storm may have been providing conflicted and incorrect advice to Storm clients who were in negative equity that they did not need to meet their margin calls and should not deal with the banks.

An EU was not ultimately executed. However, around 19 December 2008, Storm said it would cease contact with all its clients over the Christmas period. This action was not requested by ASIC and was a decision made by Storm. Storm subsequently went into administration on 9 January 2009.


From 2000 until early 2006, a number of investigations were conducted by ASIC in relation to the Westpoint Group of companies.

On 10 May 2004, Bayshore Mezzanine Pty Ltd commenced action against ASIC seeking a determination as to whether the promissory notes issued by it were regulated under the Corporations Act. On 12 May 2004, ASIC commenced proceedings against Emu Brewery Mezzanine Limited alleging that that company was carrying on an unregistered (but registrable) managed investment scheme. The two proceedings were heard together. In November 2004, the Supreme Court of Western Australia ruled that the promissory notes issued by Emu Brewery Mezzanine Ltd and Bayshore Mezzanine Pty Ltd were not debentures requiring a prospectus to be lodged with ASIC, but they were interests in a managed investment scheme. In June 2006, the Court of Appeal held that the promissory notes were interests in a managed investments scheme.

In 2004 and 2005 ASIC issued a number of interim and final stop orders in relation to the fundraising activities of the Westpoint Group.

In November and December 2005 ASIC issued applications in the Federal Court seeking to wind up York Street Mezzanine Pty Ltd and Ann Street Mezzanine Pty Ltd and to appoint a provisional liquidator in the interim. ASIC also sought orders for lodgement of financial reports for a number of Westpoint Group entities.

On 20 December 2005 the Federal Court ordered that Ann Street Mezzanine Pty Ltd and York Street Mezzanine Pty Ltd, be wound up. Orders were also made for the lodgement of financial accounts for a number of Westpoint Group entities.