Unlicensed fund manager ordered into liquidation

PE Capital Funds Management has been ordered into liquidation after the Federal Court found the firm had operated managed investment schemes without an AFS licence and engaged in misleading and deceptive conduct.

ASIC said that the firm had used money raised by its managed investment schemes to fund eight mixed-use commercial and residential projects in Victoria.

“When raising funds into its managed investment schemes, PE Capital Funds Management made misleading and deceptive statements representing that it was authorised to operate the schemes when it was not,” the regulator said.

“It also made misleading and deceptive statements about how the investments would be structured, telling investors they had preferential securities when they did not, and in the case of one fund misrepresented the investment strategy that would be used.”

The Federal Court found that more than $16 million was invested in PE Capital’s registered and unregistered managed investment schemes and said there was good reason to believe that the schemes were insolvent.

“I am satisfied that it is in the public interest to wind up PE Capital Funds Management for the purpose of protecting investors and potential investors,” said Justice Cheeseman.

“Winding up PE Capital Funds Management will also serve to condemn the past breaches of the Act by PE Capital Funds Management.”

A range of managed investment schemes operated by PE Capital were also ordered to be wound up by the Federal Court.

These include the PE Capital Monthly Yield Fund and its three sub-funds, the PE Capital Commercial Property Income Fund, the PE Capital Asia Diversified Income Fund and the PE Capital Asia Wholesale Opportunities Fund.

Additionally, the following unregistered schemes were found to be unlawful and will also be wound up:

• PE Capital Property Development Opportunities Fund (P1 Fund)
• PE Capital Property Development Opportunities Fund (P3 Fund)
• PE Capital Asia Wholesale Diversified Income Fund
• PE Capital Asia Wholesale Opportunities Fund

“Licensing and registration requirements for managed investment schemes exist to protect investors and consumers. Where these requirements are not met, ASIC can take action to protect investors and safeguard assets,” ASIC said.

Andrew Fielding from BDO has been appointed as liquidator of PE Capital and the management investment schemes.

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.