Update from ASIC regarding Sterling Group investigation
11 December 2019 update
Civil proceedings commenced by ASIC
ASIC has commenced action in the Federal Court in Western Australia focussed on the promotion and management of the Sterling Income Trust.
The action is against:
- Theta Asset Management Ltd (Theta), an Australian financial services licensee and responsible entity of Sterling Income Trust; and
- Robert Patrick Marie (Mr Marie), a director of Theta.
ASIC alleges that Theta and Mr Marie were responsible for authorising the issue of five Product Disclosure Statements for the Sterling Income Trust, failing to ensure that each of them was not defective. In particular, it is alleged that Theta and Mr Marie failed to ensure that they did not contain:
- misleading or deceptive statements; and
- omissions in respect to statements and information required to be disclosed.
ASIC also alleges multiple failures by Theta that are contrary to the compliance plan that Theta issued for the Sterling Income Trust.
ASIC is seeking:
- declarations of breach against Theta and Mr Marie for various breaches of the responsible entity and director’s duties provisions of the Corporations Act 2001;
- civil penalties against Theta and Mr Marie; and
- an order banning Mr Marie from managing corporations.
Read the full ASIC Media Release 19-347MR ASIC takes court action against Sterling Income Trust responsible entity and its managing director.
ASIC, as part of the media release, has made both the Concise Statement and the Originating Process available for download so that interested parties can obtain greater detail with respect to ASIC’s Court proceedings.
Despite the commencement of these Court proceedings, investors in the Sterling Income Trust and in Silverlink Preference Shares are strongly encouraged to continue to pursue the avenues of assistance detailed below in this website notice.
Of the 101 consumers who entered into Sterling New Life Leases, 63 of those Lessees invested in the Sterling Income Trust to generate funds to cover their rental expenses under such Leases. The remaining 38 Lessees did not invest in that Trust, rather they invested in Preference Shares offered by companies by the name of 'Silverlink' within the Sterling Group of Companies. Because Theta as Responsible Entity only had duties in relation to the Sterling Income Trust, the Court proceedings commenced by ASIC in the Federal Court are relevant to investors in the Sterling Income Trust but not relevant to investors in the Silverlink Preference Shares.
ASIC continues to investigate the roles and conduct of several parties at various points in time during the operation of the Sterling Group of Companies, including in relation to the promotion of the Silverlink Preference Shares. Consequently, it is expected that ASIC’s investigation of other aspects of the conduct in this case, not covered by the current Court proceedings, will continue well into the new calendar year due to the requirement to gather evidence admissible in a court of law to support any further proceedings ultimately considered appropriate.
Communication of this and future updates
Although no two investors will have had exactly the same dealings with the Sterling group or are currently in exactly the same circumstances, there are many issues of concern that are common to investors. It is therefore ASIC’s assessment that it is appropriate that all investors and their families should receive the same information via the ASIC website.
Although there are strict legal restrictions on ASIC’s ability to share information regarding its investigations, ASIC will continue to provide via the ASIC website such updates as it lawfully can in relation to any significant developments in its ongoing investigation and in relation to the Court proceedings it has commenced.
Avenues of assistance for investors:
There are currently a number of avenues available to individual investors to protect their interests, including seeking compensation. It is important that investors consider pursuing these avenues at the earliest opportunity, as delay in doing so may adversely affect investors’ interests.
For ease of reference, the avenues of assistance are:
For those investors who have invested in the Sterling Income Trust (SIT) overseen by Theta Asset Management ltd (Theta):
A letter dated 9 May 2019 from Theta to all investors in the SIT set out the rights of investors in the SIT and how to make complaints to Theta. In that letter Theta stated that its compliance manager would aim to resolve complaints within 45 days, but if you were not satisfied with its response you could lodge a complaint with the Australian Financial Complaints Authority (AFCA).
Further information about how to make a complaint about a financial firm can be found in ASIC Information Sheet 174 via the following link - https://asic.gov.au/about-asic/contact-us/how-to-complain/disputes-with-financial-firms/
It is important to be aware that AFCA will generally only be able to consider your complaint if it is made within six years after you first became aware, or ‘should reasonably have become aware’, that you suffered the loss you want to complain about; or if you have already complained directly to your financial firm through its internal dispute resolution (IDR) process, within two years of getting a response from your financial firm through that process. However, AFCA has advised that it will accept complaints about conduct of financial firms dating back to 1 January 2008 even if they would normally fall outside these time limits, provided those complaints are lodged between 1 July 2019 and 30 June 2020 (see the material on their website about legacy complaints for more information regarding this). AFCA may possibly extend its time limits outside this period, however you should not rely on this.
AFCA may provide a remedy if you have incurred loss that was caused by a financial firm’s conduct. It may order that you be compensated for your loss to the extent AFCA holds the financial firm responsible for that loss. Further information on how AFCA deals with complaints and the relevant time limits can be found at https://www.afca.org.au/.
For investors who have entered into a Sterling New Life lease:
After an approach by ASIC, despite having no legal obligation to do so, the secured creditor of the Sterling Group, Macquarie Bank, has made available Macquarie’s Client Care Team to speak to Sterling New Life lease tenants / investors about their particular individual circumstances, to try to offer assistance where it can. Those tenants/ investors are able to access that assistance via the office of the liquidators of the Sterling group of companies, Ferrier Hodgson, on firstname.lastname@example.org or 08 9214 1473. Macquarie Bank had no involvement in promoting Sterling New Life leases, but is making its Client Care Team staff available to try to offer assistance where it can to tenants in a vulnerable position. Landlords in a vulnerable situation are advised to consider contacting their own bank/ finance-provider, which will have a similar Client Care/Vulnerable Client team to Macquarie, and be in a better position to discuss with the landlord his or her individual circumstances.
For investors who have entered into a sterling new life lease and affected landlords:
The Department of Mines Industry Regulation and Safety (Consumer Protection Division)
Advice on tenancy rights is available via (08) 6552 9232 and email@example.com.
Advice on tenancy matters is available via (08) 9221 0088 or locate a tenancy advocate at http://www.tenancywa.org.au/find-a-tenant-advocate
For all investors in investments offered by the Sterling Group of companies:
Financial Counsellors’ Association of Western Australia.
Free independent financial counselling and legal advice on (08) 9325 1617.
Consumer Credit Legal Services
Provides legal advice and representation to consumers in WA in the areas of credit, banking and finance on (08) 9221 7066 and https://cclswa.org.au/about-us/about-cclswa/. There are time periods within which legal proceedings must be commenced. You should therefore seek legal advice to ensure that you will not be prevented from taking any legal action you might wish to take in the future due to these time limitations.
Offers a wide range of services, with almost 50 service locations across WA Financial and general counselling services on 1300 11 44 46.