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10-261AD Former Astarra investment manager pleads guilty to dishonest conduct
The former director of investment manager Astarra Asset Management Pty Limited (AAM) Mr Shawn Richard has pleaded guilty to two charges of dishonest conduct in the course of carrying on a financial services business and admitted a third charge of making false statements in relation to financial products. The charges had been laid following an investigation by ASIC.
Mr Richard, 35, appeared at Sydney’s Downing Centre Local Court today to face ASIC allegations that he dishonestly received undisclosed payments in his role as investment manager of the Astarra Stategic Fund (ASF) and Astarra Superannuation Plan (ASP) and that he knowingly made materially misleading statements about the value of investments made by the ASF.
ASIC’s investigation began on 2 October 2009 and looked at conduct between 2005 and 2009.
ASIC alleged, among other things, that Mr Richard was involved in causing the ASF and ASP to place investor monies in overseas hedge funds, in circumstances where Mr Richard would personally receive a significant portion of the monies for his own benefit and for the benefit of his company, AAM. The monies Richard placed in the overseas hedge funds had been raised by the responsible entity of ASF, Trio Capital Limited (Trio). ASIC alleged that Richard and AAM received in excess of $6.4 million in undisclosed payments.
ASIC also alleged that Mr Richard made materially misleading statements about the value of the ASF’s investments in the overseas hedge funds, knowing that these statements were included in valuation statements provided to Trio and were likely to have the effect of inducing Trio to seek further investments in the hedge funds.
In October 2009, ASIC obtained Court orders restraining Mr Richard, who is a Canadian national, from leaving Australia.
Mr Richard has also entered into an enforceable undertaking with ASIC banning him for life from providing financial services.
The charges each carry a maximum penalty of 5 years’ imprisonment or a $220,000 fine, or both.
Mr Richard was granted bail subject to a number of conditions. Mr Richard was committed for sentence to the Supreme Court of NSW and is scheduled to appear for arraignment on 4 February 2011.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.
ASIC commenced an investigation of the ASF on 2 October 2009.
Trio was formerly known as Astarra Capital Limited and prior to that Tolhurst Capital Limited. Trio is one of around 26 entities that held a licence to act both as a superannuation fund trustee and the responsible entity of managed investment schemes.
As super fund trustee, Trio operated five super funds worth $300 million and with 10,000 investors. Trio invested the superfund money it was entrusted in various proportions among the 17 active managed investment schemes Trio operated as responsible entity.
Trio’s managed investment schemes were also available to non-super fund investments, and around $126 million from around 700 investors was contributed among Trio’s various managed investment schemes.
Trio also operated a superfund administration service, which provided back-office superannuation administration to its own, and five third party superannuation trustees.
Trio is now operated by Liquidators – PPB. The role that Trio played as a superannuation trustee has been moved to a McGrath Nicol entity (ACT Super).
On 19 March 2010, after an application from PPB, the NSW Supreme Court ordered that the following Trio schemes be wound up:
- Asttar Wholesale Portfolio Service;
- Asttar Portfolio Service (formerly known as Astarra Diversified No. 4 Pool);
- Astarra Overseas Equities Pool;
- Astarra Strategic Fund; and
- ARP Growth Fund.
On 13 May 2011, Justice Peter Garling of the New South Wales Supreme Court adjourned the sentencing hearing of Shawn Darrell Richard until 22 July 2011. An adjournment was sought by the defence as Mr Richard has newly appointed legal representation. Mr Richard's bail was continued.