It doesn’t matter whether funds mislead investors with intent or not, and it doesn’t matter if other parties were partly to blame. The authorities have had enough of the excuses, and they’re lobbing record fines at transgressors.
The entrenched position of the banks and miners in the ASX 200 doesn’t necessarily correlate to inherent growth potential, especially with the issues both sectors face into. For investors, it may be worth considering an alternative path broad market exposure.
Advice group United Global Capital’s assets frozen amid ASIC investigation
The clients of self-licensed wealth management group United Global Capital face an uncertain future after assets of the licensee and its property fund were frozen by the Australian Securities and Investments Commission recently.
ASIC obtained interim orders from the Federal Court freezing the assets of the advice group while the regulator conducts an investigation into its activities.
The order means that United Global Capital, and the Global Capital Property Fund Limited, are restrained from removing property from Australia or “selling, charging, mortgaging, dealing or disposing of property”, as well as incurring new liabilities or “withdrawing, transferring, disposing of, or dealing with money held in bank accounts or with a financial institution (subject to limited exceptions)”.
It’s understood the group was operating with about 20 to 25 staff and up to 2,000 self-managed superannuation fund clients, with the assets of most on administration platform UNIP Portfolio Management.
Previous engagements
The freeze order isn’t UGC’s first run in with the regulator. In July 2022 the group was in the first batch of financial firms to be prevented from offering financial products to consumers after contravening the Design and Distrubution obligations, which took effect October 5, 2021.
In that case, two companies in the UGC Global Group, UGC Global Alpha Limited and UGC Global Alpha Fund Limited, lodged prospectuses seeking to raise $100 million for shares in a wholesale fund called UGC Alpha Global Fund. ASIC had concerns, however, that disclosure around the offer was “defective”.
“When the prospectuses were made publicly available during the exposure period, they did not have a TMD [Target Market Determination] and said that applications to invest would be processed on a ‘first come, first served’ basis,” the regulator noted at the time. “ASIC was concerned that the UGC Global companies may have engaged in retail product distribution before preparing a TMD for their high risk offers.”
UGC Global Alpha Limited subsequently withdrew its original prospectus and lodged a supplementary one in November 2022, while the UGC Global Alpha Fund did the same a month later.
ASIC said the latest orders are in place “to protect investor funds” while an investigation takes place.
After a hearing on June 25, the Court gave UGC a short reprieve and extended the time for the group to comply with some of the disclosure requirement orders. The matter has been adjourned for a further hearing on July 11.
On its website, UGC boasts of cost efficiency gleaned from “direct investment” in major asset classes, and “by consolidating the roles of your adviser, broker, fund manager and administrator” into a single service provider.
“Other advisory firms and their advisers lack the sophistication, experience, institutional or strategic relationships to deliver direct investment opportunities to their clients in markets located around the globe,” the website states.
