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Regulatory

ASIC issues another stop order for private credit fund

ASIC has issued an interim stop order on the Murdoch Clarke Mortgage Fund, issued by Murdoch Clarke Mortgage Management, prohibiting it from offering, issuing, selling or transferring interests in the fund.

The fund had $573.2 million in assets under management as at June and invests in interest-only loans with principal to be repaid on demand and mortgages secured over Australian real property in Tasmania.

ASIC said it made the interim order to protect retail investors from acquiring products under a product disclosure statement (PDS) that may be defective and not worded and presented in a clear, concise and effective manner.

This is one of several stop orders imposed by the regulator in recent months as it cracks down on the private credit sector.

"We'll release the findings of our second private credit surveillance soon, however, it's already clear that practices are not where we need them to be," ASIC commissioner Simone Constant said.

"Firms must ensure their disclosures to investors are transparent and support informed decision making. Where ASIC identifies concerns, we won't hesitate to act swiftly to protect investors from potential harm."

ASIC is concerned that the PDS fails to disclose information about related-party transactions, adequately disclose information about the fees and costs associated with an investment, and contains insufficient information about risks. It also fails to adequately disclose details about withdrawals.

The stop order arose from ASIC's surveillance of private credit funds which is focused on the distribution of private credit funds to retail clients through direct and advised channels.

A spokesperson for Murdoch Clarke Mortgage Fund said as soon it was made aware of the interim stop order it immediately took steps to provide an amended PDS to ASIC for consideration.

"We are awaiting feedback from ASIC about the amendments we have made, and we are confident the changes will address its concerns," the spokesperson said.

"We are focused on working collaboratively with ASIC to get the interim stop order lifted as soon as possible."

ASIC will consider making a final order if the concerns are not addressed in a timely manner and Murdoch Clarke will have an opportunity to make submissions before a decision is made about any final stop order.

Late September, Constant said the regulator was "beyond warnings" and pushed private credit players to assess themselves against its 10 best practice principles.

She urged the sector to uplift standards, noting participants should prepare for enforcement action if they fail to do so.

Read more: ASIC,  Murdoch Clarke Mortgage Fund,  Murdoch Clarke Mortgage Management