A failed retirement housing scheme that collapsed in 2019 is in the spotlight after the ABC turned the cameras on the plight of the elderly investors who lost their cash when it went under.
The 7.30 report blurred whether it was an investment operator or a retirement village operator. Contracts were the focus.
The WA Federal Court in Western Australia had found that the Sterling First group – operated by Theta Asset Management Ltd (In Liquidation) (Theta) and its Managing Director, Robert Marie – contravened the Corporations Act on multiple occasions in authorising the issue of five defective Product Disclosure Statements for the Sterling Income Trust.
ASIC won’t chase $2 million penalty
The Court had ordered Theta to pay a penalty of $2 million – but ASIC says it won’t pursue its recovery as it would take away from the funds available to be returned to investors.
The Court also found that Mr Marie contravened the Corporations Act and failed to comply with his duties as a managing director of Theta, ordering him to pay a penalty of $100,000 and also disqualifying him for four years from managing corporations.
In handing down his judgment, The Hon Justice McKerracher noted that the circumstances involved catastrophic losses sustained by investors – which were highlighted by ABC’s 7.30 Report last Thursday.
ASIC found in total; Sterling raised $16.7 million between 20 May 2016 to 30 April 2018 from 101 consumers who invested in the defective Product Disclosure Statements.
The company went into liquidation in June last year.
Investors say watchdog could have acted earlier
ASIC had initiated proceedings against Theta and Mr Marie in December 2019, but Sterling investors who appeared on the program alleged that they had made complaints to the financial watchdog as early as 2016 which were dismissed because of lack of evidence.
ASIC however rejected that the body had not done enough to pursue Theta and Mr Marie.
“ASIC needs to have sufficient evidence to take action to stop unlawful conduct,” it said in a statement to the ABC.
“In this case, when ASIC had sufficient evidence, it did take action against Theta Asset Management and Mr Marie.”
ASIC promises to pursue Sterling investigation
ASIC Commissioner Cathie Armour added: “The Federal Court outcome sends an important deterrent message to other responsible entities, as well as to those entrusted to act as gatekeepers, to ensure they comply with their legal obligations.”
“ASIC will take action to hold gatekeepers to account.”
It says its investigation into the group will continue.