Key Takeaways
- • ASIC issued an interim stop order on the product disclosure statement (PDS) of the Murdoch Clarke Mortgage Fund, a managed investment scheme, citing deficiencies in investor disclosures.
- • The regulator flagged four PDS shortcomings: undisclosed related party transactions, inadequate fee and cost disclosure, insufficient and unclear risk information, and inadequate disclosure of withdrawal terms.
- • The fund reported $573.2 million in net assets under management as of 30 June, per the ASIC announcement, and invests mainly in interest-only loans and Tasmanian real property mortgages.
- • ASIC Commissioner Simone Constant said the regulator will soon publish findings of its second private credit surveillance, stating that "practices are not where we need them to be."
- • ASIC will consider a final order if the concerns are not addressed in a timely manner.
Summary
The Australian Securities and Investments Commission (ASIC) has issued an interim stop order on the product disclosure statement (PDS) of a managed investment scheme, the Murdoch Clarke Mortgage Fund, signaling continued regulatory pressure on private credit providers. The order was issued against Murdoch Clarke Mortgage Management Ltd, the responsible entity for the product.
ASIC identified four specific deficiencies in the PDS. According to the regulator, the document fails to disclose information about related party transactions; fails to adequately disclose fees and costs associated with investing in the fund; contains insufficient information about risks, and what risk information is provided is not presented in a clear, concise and effective manner; and fails to adequately and prominently disclose details about withdrawals. ASIC stated it will consider making a final order if these concerns are not addressed in a timely manner.
The interim stop order arose from ASIC's broader surveillance of private credit funds. That surveillance focuses on the distribution of private credit funds to retail clients through direct and advised channels, as well as fees, margin structures and conflict-of-interest management in wholesale private credit funds. ASIC noted that as of 30 June, the Murdoch Clarke fund had $573.2 million in net assets under management. The fund invests mainly in interest-only loans, with principal repayable on demand, and in mortgages secured over Australian real property, specifically vacant or built-on land in Tasmania.
ASIC Commissioner Simone Constant said the regulator will soon release the findings of its second private credit surveillance, adding that "it's already clear that practices are not where we need them to be." She emphasised that "firms must ensure their disclosures to investors are transparent and support informed decision making," and that ASIC "won't hesitate to act swiftly to protect investors from potential harm" where concerns are identified.
ASIC identified four specific deficiencies in the PDS. According to the regulator, the document fails to disclose information about related party transactions; fails to adequately disclose fees and costs associated with investing in the fund; contains insufficient information about risks, and what risk information is provided is not presented in a clear, concise and effective manner; and fails to adequately and prominently disclose details about withdrawals. ASIC stated it will consider making a final order if these concerns are not addressed in a timely manner.
The interim stop order arose from ASIC's broader surveillance of private credit funds. That surveillance focuses on the distribution of private credit funds to retail clients through direct and advised channels, as well as fees, margin structures and conflict-of-interest management in wholesale private credit funds. ASIC noted that as of 30 June, the Murdoch Clarke fund had $573.2 million in net assets under management. The fund invests mainly in interest-only loans, with principal repayable on demand, and in mortgages secured over Australian real property, specifically vacant or built-on land in Tasmania.
ASIC Commissioner Simone Constant said the regulator will soon release the findings of its second private credit surveillance, adding that "it's already clear that practices are not where we need them to be." She emphasised that "firms must ensure their disclosures to investors are transparent and support informed decision making," and that ASIC "won't hesitate to act swiftly to protect investors from potential harm" where concerns are identified.
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