ASIC has made an interim stop order against La Trobe US Private Credit Fund (Fund), a registered managed investment scheme operated by La Trobe Financial Asset Management Limited (La Trobe) to protect consumers and retail investors from acquiring a product that may not be suitable for their financial objectives, situation or needs.
ASIC's action follows concerns the Target Market Determination (TMD) for the Fund:
- suggests an inappropriate level of portfolio allocation given the risks of the Fund, and
- does not adequately specify an investment timeframe for retail clients.
The interim order prevents La Trobe from dealing in interests giving a product disclosure statement for, or providing general financial product advice to, retail clients recommending an investment in the Fund. The order is valid for 21 days unless revoked earlier.
This stop order referral arose from ASIC's retail private credit surveillance which focused on fund transparency, governance, valuation practices, management of conflicts of interest and fair treatment of investors, conducted as part of its response to Australia's evolving capital markets.
Background
The Fund invests primarily into a portfolio comprised of senior secured first-lien term loans issued to US corporate middle market companies. These US companies are not rated by any rated agency and investing in these loans involves an above average amount of risk and volatility or loss of principal. The Fund was registered on 21 May 2024. At 31 December 2024 the half yearly financial report for the fund disclosed $215.8 million in net assets. Offers of the Class B units appear to have commenced in June 2024 and in the half year to 31 December 2024 $8.2 million has been raised in this class.
On its website La Trobe promotes itself as one of Australia's premier alternative asset managers with $20 billion in assets under management and over 120,000 investors.
Under the design and distribution obligations (DDO), financial product issuers and distributors must ensure the product's TMD is clear and appropriately defines the target market and accurately reflects the product's risks and features. ASIC expects all issuers to regularly review their TMDs and make changes as necessary to ensure the accurate risks and features of the fund describes the target market.
To date, ASIC has issued 91 interim stop orders and one final stop order under DDO since the inception of the regime.
Where firms are not doing the right thing, ASIC can take quick action under DDO to disrupt poor conduct and prevent potential consumer harm.
