The Supreme Court of New South Wales has found that Macquarie Investment Management Ltd (MIML) contravened the Corporations Act by failing to comply with its duties as a responsible entity of the van Eyk Blueprint International Shares Fund (VBI Fund). The Court made declarations of contravention and ordered that MIML pay a civil pecuniary penalty of $400,000, as well as $200,000 for ASIC’s legal costs.
The decision comes as a result of civil penalty proceedings brought by ASIC against MIML in June this year. MIML admitted the contraventions and the parties filed a Statement of Agreed Facts and joint submissions as to the appropriate penalty.
The Court found that MIML failed to comply with its duties as a responsible entity by:
- failing to exercise the degree of care and diligence that a reasonable person would exercise if they were in MIML’s position with respect to 3 investments totalling $30m into Cayman Islands based fund Artefact Partners Global Opportunities Fund (Artefact), between 6 July to 30 October 2012;
- allowing members to redeem or withdraw units from the VBI Fund when it was illiquid in contravention of the Corporations Act between 15 June 2013 to 9 September 2013; and
- failing to make adequate and timely enquiries in relation to van Eyk’s monitoring of the VBI Fund’s investment in Artefact between 18 February 2013 and 21 July 2014 (including not making adequate and timely enquiries as to why a full redemption from Artefact had not been paid between 1 January 2014 to 21 July 2014).
Commissioner Greg Tanzer said:
This is a significant decision for investors and confirms the important role of responsible entities in monitoring and supervising funds, even where external managers are appointed. ASIC will take action when responsible entities fail to meet those obligations.”
To see the full ASIC release click here.