Key Takeaways
- • ASIC made interim stop orders on Monday preventing Angas Securities Limited from offering, issuing, selling or transferring interests in two managed investment schemes: the Angas Prime Income Fund and the Angas Direct Mortgage Fund.
- • The regulator used its design and distribution obligations (DDO) regime, marking another interim stop order on a private credit product following earlier action of the same kind.
- • ASIC's concerns center on inadequate disclosure of Angas Securities' own financial position and, for the Prime Income Fund, its exposure to the collapsed Bathla Group.
- • ASIC Commissioner Simone Constant said private credit fund managers must give investors clear and timely information about risks, particularly when loans run into difficulty.
Summary
The Australian Securities and Investments Commission (ASIC) has again used the design and distribution obligations (DDO) regime to impose an interim stop order on a private credit product, according to the Financial Newswire report. ASIC announced on Monday that it had made interim stop orders preventing Angas Securities Limited from offering interests in two managed investment schemes: the Angas Prime Income Fund and the Angas Direct Mortgage Fund.
The regulator said the orders were prompted by concerns that the funds' product disclosure statements do not adequately disclose Angas Securities' financial position. ASIC stated that investors in both funds may not have been adequately informed about the financial position of Angas Securities and the risks arising from that position. For the Angas Prime Income Fund, ASIC also raised concerns about disclosures relating to the fund's exposure to the collapsed Bathla Group and the risks arising from that exposure.
In announcing the move, ASIC Commissioner Simone Constant said the regulator's message to private credit fund managers was "crystal clear": investors need clear and timely information about the risks they take on, particularly when circumstances change and private credit loans run into difficulty. She said the collapse of the Bathla Group had highlighted the risks that can emerge in private credit when that message is ignored, and underscored the importance of strong governance, appropriate valuations and clear disclosure to private credit investors.
The stop orders restrict Angas Securities from offering, issuing, selling or transferring interests in the affected schemes while ASIC's concerns are considered. The action indicates that the DDO regime is being applied as an active supervisory tool in the private credit sector.
The regulator said the orders were prompted by concerns that the funds' product disclosure statements do not adequately disclose Angas Securities' financial position. ASIC stated that investors in both funds may not have been adequately informed about the financial position of Angas Securities and the risks arising from that position. For the Angas Prime Income Fund, ASIC also raised concerns about disclosures relating to the fund's exposure to the collapsed Bathla Group and the risks arising from that exposure.
In announcing the move, ASIC Commissioner Simone Constant said the regulator's message to private credit fund managers was "crystal clear": investors need clear and timely information about the risks they take on, particularly when circumstances change and private credit loans run into difficulty. She said the collapse of the Bathla Group had highlighted the risks that can emerge in private credit when that message is ignored, and underscored the importance of strong governance, appropriate valuations and clear disclosure to private credit investors.
The stop orders restrict Angas Securities from offering, issuing, selling or transferring interests in the affected schemes while ASIC's concerns are considered. The action indicates that the DDO regime is being applied as an active supervisory tool in the private credit sector.
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