ASIC has commenced action in the Federal Court in Western Australia focussed on the promotion and management of the Sterling Income Trust.
The action is against:
- Theta Asset Management Ltd (Theta), an Australian financial services licensee and responsible entity of Sterling Income Trust; and
- Robert Patrick Marie, a director of Theta.
ASIC alleges that Theta and Mr Marie were responsible for authorising the issue of five Product Disclosure Statements for the Sterling Income Trust, failing to ensure that each of them was not defective, in particular, that they did not contain:
- misleading or deceptive statements; and
- omissions in respect to statements and information required to be disclosed.
ASIC also alleges that contrary to the compliance plan that Theta issued for the Sterling Income Trust, Theta:
- issued five defective Product Disclosure Statements for the Sterling Income Trust;
- failed to take all steps necessary to effectively monitor the performance of Sterling Corporate Services Pty Ltd (SCS) as the investment manager of the Sterling Income Trust and satisfy itself that SCS had carried out its contractual obligations adequately;
- failed to identify, document, assess, evaluate and effectively manage and control all conflicts of interest; and
- failed to ensure all financial statements of the Sterling Income Trust were completed and available for audit within two months of the relevant period and were lodged with ASIC on or before the lodgement date.
ASIC is seeking declarations of breach against Theta and Mr Marie for various alleged breaches of the responsible entity and director’s duties provisions of the Corporations Act 2001, including that they failed to exercise appropriate care and diligence when issuing each of the relevant Product Disclosure Statements. ASIC is also seeking civil penalties against Theta and Mr Marie, and an order banning Mr Marie from managing corporations for such period as the Court deems fit.
The alleged breaches of section 601FC of Act by Theta and breaches of 601FD by Marie each carry a maximum possible pecuniary penalty of $200,000.
In total, between 20 May 2016 to 30 April 2018, $16,749,974 was raised from retail investors pursuant to the alleged defective Product Disclosure Statements.
ASIC’s investigation is ongoing into other conduct by entities and officers within the Sterling Group of companies.
Of the 101 consumers who entered into Sterling New Life Leases, 63 of those Lessees invested in the Sterling Income Trust to generate funds to cover their rental expenses under such Leases. The remaining 38 Lessees did not invest in that Trust, rather they invested in Preference Shares offered by companies within the Sterling Group of Companies.
ASIC provides updates on its ongoing Sterling Group investigation on the ASIC website.