ob体育 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) (the Fund), because of misleading or deceptive statements in the Fund鈥檚 marketing and disclosure.聽 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).聽 The order is valid for 21 days unless revoked earlier.
ob体育 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 鈥楥ovid-proof鈥�;
- inappropriately comparing the Fund to lower risk investments, benchmarks and indices; and
- using outdated performance numbers.
ob体育 identified the misleading or deceptive statements in advertisements for the Fund, including Fawkner鈥檚 website, and the PDS during a recent surveillance.聽
ob体育 may consider further regulatory action in relation to the Fund and Fawkner.聽
Background
The interim stop order against Fawkner is a result of ob体育鈥檚 ongoing surveillance to identify the use of misleading performance and risk representations in marketing by managed funds (22-061MR).聽 ob体育 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.
ob体育鈥檚 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.
ob体育鈥檚 Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) (RG 168) sets out guidance to product issuers on preparing compliant disclosure documents that promote product understanding and comparison.聽 Promoters of managed funds should ensure they are familiar with the principles and guidance set out in RG 234 and RG168.
Editor鈥檚 note:
Following a hearing on 11 August 2022, ob体育 made a further interim stop order against Fawkner prohibiting the conduct covered by the initial order until 31 August 2022. On 16 August 2022, ob体育 made a final stop order prohibiting Fawkner from offering, issuing, selling or transferring interests in the Fund under the PDS dated 11 March 2022 and the Supplementary PDS dated 2 May 2022.