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Monday 29 November 2021

21-319MR La Trobe Financial Asset Management to pay $750,000 penalty for false and misleading marketing

The Federal Court has ordered La Trobe Financial Asset Management (La Trobe) to pay a $750,000 penalty for false and misleading marketing of the La Trobe Australian Credit Fund (the Fund).

La Trobe’s advertising in newspapers, magazines and on websites included statements that any capital invested in the Fund would be ‘stable’. ASIC claimed that this gave the impression there could be no loss of capital and that La Trobe failed to express in a sufficiently prominent manner that a person who invested in the Fund could, in fact, lose substantial amounts of capital invested.

The Court found that the statement that any capital invested in the Fund would be ‘stable’, in the sense of there being no risk of substantial loss of that capital, was a false or misleading representation.

The Court also found that La Trobe made false or misleading representations that investors in its 48 Hour Account and 90 Day Account would be able to withdraw their funds between 48 hours and 90 days of providing withdrawal notice whereas:

  • La Trobe had up to 12 months to satisfy a withdrawal while the Fund was liquid;
  • if the Fund ceased to be liquid, investors were entitled to withdraw only when a withdrawal offer was made by La Trobe.

ASIC Deputy Chair Karen Chester said, ‘When consumers are considering investments, they need to be provided with accurate information that doesn’t mislead them. 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.’

ASIC’s ‘True to Label’ initiative identified promotional material from a number of funds that could be misleading investors. ASIC is concerned about this type of misconduct, especially when investors are seeking yield in a low interest rate economy. Advertising is misleading when products are described as having less risk, when in fact, investors could lose some or all of their investment.

‘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’, said ASIC Deputy Chair Karen Chester.

In his decision, Justice O’Bryan stated ‘The misleading conduct 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.

Each of the representations was made over periods ranging from about one year to more than three years, in a variety of different media that were all accessible by the general public. Further, the misleading conduct potentially affected investment decisions involving very large sums of money,’

La Trobe, as the responsible entity of the Fund, was ordered to pay ASIC’s costs. The Court acknowledged La Trobe’s consent to the declarations of liability and pecuniary penalty.




The Fund’s Product Disclosure Statement says that it is authorised to hold a mixture of mortgage assets, cash, notes and other assets. The Fund is an unlisted registered managed investment scheme with over $5.15 billion in Assets under Management and over 45,000 investors.

A person may acquire an interest in the Fund (and thus become a member of the Fund) by making an investment in the Fund. The minimum investment is currently $10.

ASIC began Federal Court proceedings against La Trobe in December 2020 (20-333MR).