Australia’s securities regulator has opened a preliminary investigation into Clime Asset Management Pty Ltd and one of its funds for allegedly breaching legislation on product disclosures and target market.
The regulator announced the probe in a statement on October 30, the same day that The Australian newspaper reported that Clime Investment Management, a listed firm that owns Clime Asset Management, is being “formally investigated” because its funds and entities have invested into the now collapsed First Guardian and Shield funds.
“The preliminary investigation is in respect of the Clime Australian Income Fund and compliance of the target market determination and product disclosure statement with the law, and whether there have been breaches of the law in relation to the investments of the Fund,” the Australian Securities and Investments Commission (ASIC) says.
The regulator adds that the probe is at the preliminary stage so the scope may change.
“No adverse inference should be drawn from an investigation,” it says.
Launched in 2015, the Clime Australian Income Fund invests in a portfolio of local listed and unlisted securities and seeks to outperform the Reserve Bank of Australia’s cash rate plus 3%.
ASIC shut down the First Guardian and Shield funds and froze the assets last year after discovering the managers committed several instances of fraud.
The UK’s The Guardian newspaper reported in July that the collapse resulted in more than A$1 billion (US$654 million) of losses for Australians.
Meanwhile, Clime Investment issued a statement to the Australian bourse on October 30 confirming the probe but denying a formal investigation.
According to the firm it was “extraordinary” for The Australian to report of a formal investigation as an absolute fact, and that its lawyers have written to the newspaper and to ASIC seeking a correction.
Clime Investment managed A$1.67 billion of assets as of end-September.
