The Federal Court has ordered PE Capital Funds Management Ltd into liquidation after finding that the firm breached the law by operating managed investment schemes without an AFS licence and by engaging in misleading and deceptive conduct.
From around 2015, PE Capital Funds Management used the money raised by its managed investment schemes to fund eight mixed-use commercial and residential projects in Victoria. When raising funds into its managed investment schemes, PE Capital Funds Management made misleading and deceptive statements representing that it was authorised to operate the schemes when it was not. It also made misleading and deceptive statements about how the investments would be structured, telling investors they had preferential securities when they did not, and in the case of one fund misrepresented the investment strategy that would be used.
The Court found that over $16M was invested in the registered and unregistered managed investment schemes and that there is good reason to believe that these schemes are insolvent.
In ordering the liquidation, Justice Cheeseman stated, ‘I am satisfied that it is in the public interest to wind up PE Capital Funds Management for the purpose of protecting investors and potential investors. Winding up PE Capital Funds Management will also serve to condemn the past breaches of the Act by PE Capital Funds Management.’
PE Capital Funds Management operated the following managed investment schemes, which the Court also ordered be wound up:
- PE Capital Monthly Yield Fund, and its three sub-funds, the PE Capital Commercial Property Income Fund, the PE Capital Asia Diversified Income Fund and the PE Capital Asia Wholesale Opportunities Fund;
- PE Capital Master Fund;
- PE Capital Property Development Opportunities Fund (P1 Fund);
- PE Capital Property Development Opportunities Fund (P3 Fund);
- PE Capital Asia Wholesale Diversified Income Fund; and
- PE Capital Asia Wholesale Opportunities Fund.
The PE Capital Monthly Yield Fund and its three sub-funds and the PE Capital Master Fund were all registered, while the remaining schemes were unregistered. The unregistered managed investment schemes were found to be unlawful, with the Court finding that they should have been registered.
Licensing and registration requirements for managed investment schemes exist to protect investors and consumers. Where these requirements are not met, ASIC can take action to protect investors and safeguard assets.
Andrew Fielding from BDO has been appointed as liquidator of PE Capital Funds Management and the schemes listed above. Investors and creditors should direct their enquiries to: Jane Ward, BDO, email: jane.ward@bdo.com.au, phone: (07) 3173 5424.
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Background
ASIC sought the winding up orders on 14 May 2021 (21-100MR).
Generally, a managed investment scheme must be registered if it has more than 20 members or is promoted by a person who is in the business of promoting managed investment schemes. ASIC’s website has more information about when to register managed investment schemes.