ASIC accused of slow response to Trio

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Victims of Financial Fraud (VOFF) spokesperson Paul Matters is accusing ASIC of having acted too slowly back in October 2009in freezing a Trio-related bank account that contained investors’ funds.

Speaking to members of VOFF on Friday, he produced what he said was the last bank statement for Astarra Capital – one of the superannuation funds that Trio Capital was trustee for – and claimed it showed that ASIC’s failure to act earlier resulted in more investors’ money being stolen. He said the statement showed almost $75m in the account as at 30 June 2009, and that ASIC froze the account only in October, at which point it contained no money.

VOFF members last week marched to the office of Member for Throsby Stephen Jones, who they have accused of being insensitive to victims in the Illawarra community that were denied access to a $55m compensation plan. They were delivering letters asking Jones to retract a statement he made to the press regarding the loss of funds from the Trio collapse.

Matters said the statement was disgraceful, false, and done for political purposes. “The Member for Throsby claims in the paper that the cause of all this is your decision to invest in Astarra. It’s like saying if you’re in a car accident and you’re hit by someone driving on the wrong side of the road who’s drunk, then you contributed to the accident because you bought the car and you were driving,” he said.

Matters claims that the bank statement is a “smoking gun” that proves a cover-up in the case. He called for a meeting with Jones to go through the information, and for Jones to withdraw the statements he made that were “against the good name” of investors.

  • Simon Makeham CPA FPS SSA on 25/02/2013 10:39:12 AM

    I wonder if John Telford is prepared to accept that accountants and financial advisers acted in good faith when they recommended this investment - they are also the victims of the Trio fraud.

  • frank smith on 25/02/2013 11:49:22 AM

    I agree entirely with Simon's comments. There are many adviser's who have had their personal and professional lives ruined.

  • GAB on 25/02/2013 1:06:59 PM

    There's this little old saying "you won't know an investment is bad until it goes bad". That alone is a reason why one should never invest too much money in one place. Now you'll still get those smart alec comments on here like "advisers and investors were idiots for recommending/using this or that and they clearly didn't understand that asset class was about to fail". Yet somehow the expert fund researchers didn't pick up on the flaws in many of the failed investments, neither did ASIC....but the smart alecs expect investors and advisers to fully predict a disaster and be able to avoid them. The 'know your product" rule...good luck with that one. Designed to shift the blame and liability to many an adviser.

  • Pat on 25/02/2013 5:30:37 PM

    @GAB - do you mean the "expert" fund researchers who were paid by the fund managers for the products they were researching?

    Or the "advisers" who were paid by the fund managers commissions to recommend their products?

    Or the dealer groups who were paid "marketing fees" to recommend the products that failed. Oh, wait, the marketing fee had nothing to do with the sale of product, did it?

    I have not heard anyone here say that predicting the disaster was expected. But, if you put money in a hedge fund, how will you know what is going on? How will you know under what conditions such an investment may fail. The advisers bought the spin "equity like returns with bond like volatility" without putting much more thought to it, apart from the commissions they were paid.

  • Matthew Ross on 25/02/2013 6:59:47 PM

    Can anyone confirm or deny if Trio paid commissions to advisers or accountants?

  • Matthew Ross on 25/02/2013 7:09:02 PM

    Just downloaded the 204 page Government report; it says high commissions were paid. This comment is simple and maybe somewhat ruthless, any investment that needs to provide an incentive for someone to recommend it has something wrong with from the word go. Any adviser that relies on commissions from investments is a fool, and unfortunately so is their client, from the word go.

  • John Hempton on 26/02/2013 7:01:09 AM

    You kidding about the advisors aren't you? Astarra Trio was transparently fraudulent.

  • GAB on 26/02/2013 9:55:32 AM

    Pat, commissions and entry fees always seem too high when an investment fails. Retail managed funds like Perpetual and Colonial charge 4% entry fee...have they blown up? A stack of failed managed funds used on platforms with no commission involved and they blew up. The rot starts at the top, and like you say, pay for ratings research, marketing fees, over-rides etc. All types of hedge funds out there...most the industry super funds use hedge funds and other alternatives, so does the Future Fund....i guess they got sucked in by the spin too. The whole GFC was created by fraud when you think about it...so why don't we all put in a claim for damages.

  • JD regional planner on 26/02/2013 12:08:42 PM

    the parliamentary enquiry report quotes AIOFP CEO saying Seagrims arranged 0.2% margin for white labeling the Astarra product.they shifted $100m of client funds to it in a very short space of time, with their advisors then receiving normal advisor commissions on top of the dealer receiving the .2% margin plus a marketing allowance. The ASIC banning says they didnt disclose the 0.2 %, and also failed to provide some SOA's and undertake some fact finds.
    Advisers may very well have been duped by the Astarra fraudsters, but did they put clients interests first? is there any fund you would ever contemplate shifting so many existing clients into under any circumstances ever?

  • Stephen Reed on 26/02/2013 4:48:47 PM

    How is it that society has go to the point where investors do not believe that they have the ultimate responsibility for what they do (or parents teaching their kids to swim etc etc) - and that the rest of society should pay for their mistakes or losses. I have recently incurred considerable loss due to weather on my farm - will John Telford please compensdate me as the weather bureau was wrong with their forecast - he expects me to compensate him (via my taxes). Investment involves risk - which is what it is all about.

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