The Australian Securities and Investments Commission (ASIC), has initiated proceedings in the Federal Court in Brisbane against PE Capital Funds Management Ltd for misconduct in the operation of managed investment schemes.
the ASIC had initiated investigations against the company and it was found that the company had operated four schemes that had to be registered with it but the company did not and continued to run the unregistered schemes. The company did not posses a Australian Financial Services License (AFSL) and continued to operate such schemes which is against the regulatory laws.
The company had also projected itself to being an authorised corporate representative with the regulatory authorities and issued information memoranda as well as units for its unregistered schemes. It made statements in Product Disclosure Statements that were meant for registered schemes though it was not registered.
All the above activities constituted a violation of the regulatory laws, ASIC argues, and hence it has decided to initiate the court proceedings and is seeking orders to wind up the PE Capital Funds Management company and all its registered and unregistered schemes.
The ASIC has been working on cleaning up the financial services sector over the last few years. Things have been tightened up a lot by the regulatory authority over the years and the newer entities have to undergo far more scrutiny that what the earlier ones used to. Also, even after starting the business, the companies have to adhere to strict rules and laws, failing which the ASIC has been very quick to come down hard on them in recent times.
This is good in the long run as it helps to clean by the financial services system in Australia and this would in turn help to improve the trust that the investors have on the system. This is likely to bring in more investments in the long run and also help to keep the smaller investors and traders safe from such schemes.
It is also noted that the above company had used the funds invested in the unregistered schemes for developing eight mixed use residential and commercial projects located in Victoria state.
This also shows how quickly such schemes can spread and how quickly these funds can be invested into other vehciles making recovery very hard for the regulatory authorities. The investors also need to share such responsibility with the ASIC and help it by making sure that they check with the authorities in case there are any doubts regarding an investment scheme.