ASIC has made an interim stop order preventing advertisements containing certain misleading or deceptive statements about PPM Units, a class of interests in RES Investment Fund (Fund). The responsible entity of the Fund is Responsible Entity Services Limited (RES).
The order stops RES from advertising or publishing any statement regarding PPM Units that suggests an investor will acquire equity in Pleasure Point Mine Pty Ltd (PPMPL), a related entity of RES. The stop order is valid for 21 days unless revoked before then.
ASIC considers that statements that investors will acquire equity in PPMPL are misleading or deceptive because they may lead investors in PPM Units to believe that they will receive shares and/or a direct ownership interest in PPMPL. The statements are not consistent with the description of the PPM Units in product disclosure statements for the Fund and PPM Units.
ASIC notes that the sole underlying asset of the PPM Unit class in the Fund is a loan to PPMPL.
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ASIC identified misleading or deceptive statements in an online advertisement for PPM Units during a recent surveillance that examined the marketing and disclosure for the Fund.
ASIC may consider further regulatory action in relation to the Fund and RES.
Background
The interim stop order on advertisements of PPM Units is an outcome of ASIC’s ongoing surveillance into the marketing of managed funds, which aims to identify the use of misleading performance and risk representations in promotional material (22-061MR).
Where misleading representations are identified, ASIC may take administrative, civil or criminal enforcement action to protect the interests of investors. Information Sheet 151 describes ASIC’s approach to enforcement (INFO 151).
ASIC has recently taken enforcement action against fund managers for misleading or false advertising, including action against the Mayfair 101 Group (21-364MR) and La Trobe Financial Asset Management (21-319MR).
ASIC’s Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (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. Promoters of managed funds should ensure they are familiar with the principles and guidance set out in RG 234.
