ASIC has made an interim stop order preventing Fawkner Property Ltd (Fawkner) from issuing or transferring interests in Private Property Trust No. 20 (marketed as Essential Services Trust No. 20) (theย Fund), because of misleading or deceptive statements in the Fundโs marketing and disclosure.ย Fawkner is the responsible entity of the Fund.
The order stops Fawkner from offering, issuing, selling or transferring interests in the Fund based on existing product disclosure statements (PDS).ย The order is valid for 21 days unless revoked earlier.
ASIC considers that Fawkner misrepresented the performance risks of the fund in its marketing by:
- not adequately explaining how forecasted returns were calculated;
- not providing adequate warnings that the forecasted performance may not be achieved;
- using the term โCovid-proofโ;
- inappropriately comparing the Fund to lower risk investments, benchmarks and indices; and
- using outdated performance numbers.
ASIC identified the misleading or deceptive statements in advertisements for the Fund, including Fawknerโs website, and the PDS during a recent surveillance.
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ASIC may consider further regulatory action in relation to the Fund and Fawkner.
Background
The interim stop order against Fawkner is a result of ASICโs ongoing surveillance to identify the use of misleading performance and risk representations in marketing by managed funds (22-061MR).ย ASIC recently issued stop orders against Responsible Entity Services Limited for misleading or deceptive representations in advertising (22-188MR) and breaches of the design and distribution obligations (22-194MR) that were identified during this surveillance.
ASICโs Regulatory Guide 234ย Advertising financial products and services (including credit): Good practice guidanceย (RG 234) assists fund managers and others in the industry to comply with their legal obligations not to make false or misleading statements or engage in misleading or deceptive conduct.
ASICโs Regulatory Guide 168ย Disclosure: Product Disclosure Statements (and other disclosure obligations)ย (RG 168) sets out guidance to product issuers on preparing compliant disclosure documents that promote product understanding and comparison.ย Promoters of managed funds should ensure they are familiar with the principles and guidance set out in RG 234 and RG168.