ASIC pressed to stamp on bank-like fund

PUBLISHED: 05 Mar 2013 PRINT EDITION: 05 Mar 2013 Gift Article: 100

Ben Wilmot and Nick Lenaghan The Australian Securities and Investments Commission is under pressure to toughen its scrutiny of unlisted property and mortgage schemes. The regulator is eyeing disclosures made by an unlisted mortgage fund run by LM Investment Management that is heavily exposed to a Gold Coast project it claims will have an end value of up to $1.6 billion. The funds manager had marketed the product the $400 million LM Managed Performance Fund to offshore institutions as offering a bank-like facility, the ABCs Four Corners reported. Although this statement was later withdrawn, ASIC chairman Greg Medcraft told the program that its something that we will have a closer look at. ASIC declined to elaborate further on Monday, while LM pointed out the regulator had approved another of its funds last week. Zenith Investment Partners senior investment analyst Dugald Higgins said that in terms of being an issuer of mortgage funds, there certainly is increased regulatory scrutiny. He said a fund manager referring to itself as a bank or similar would be treated as extremely serious issue and the regulator had a record of pursuing it. Former ASIC investigator and lawyer Niall Coburn, who has investigated LM on behalf of a rival manager, has questioned the capacity of the regulator to properly investigate collapses in the sector that have cost elderly investors billions. What needs to happen is that theres an immediate judicial inquiry that has the power to ban, make orders, freeze fund overseas, and appoint receivers, he said. Meanwhile, a marathon month-long trial against Prime Trusts former directors is set down to start in May this year in the Federal Court. ASIC has alleged five Prime directors breached their duties by approving the payment of a controversial $33 million listing fee to companies run by Prime founder Bill Lewski. Among the five are Mr Lewski, Primes former chairman, the former federal health minister Michael Wooldridge, and prominent Victorian property player and Liberal stalwart Peter Clarke. The Australian Financial Review

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Click on the links below to create an alert and receive the latest news as it happens People Greg Medcraft , Michael Wooldridge , Peter Clarke Topics Financial Services Industry, Property - Commercial