Fiducian Group shares tumble on ASIC civil penalty proceedings
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More news: Fiducian Group shares took a hit after the corporate regulator launched civil penalty proceedings against the financial services company's subsidiary, Fiducian Investment Management Services, for misleading and deceptive conduct about its environmental, social and governance fund.
Fiducian shares were down 4.7% to $12.55 at 2:40pm AEST, having advanced 50% over the last 12 months.
ASIC takes Fiducian Group to court over ESG investment fund failures
The news: The corporate regulator has launched civil penalty proceedings against Fiducian Investment Management Services Limited (FIMSL), a subsidiary of listed financial services company Fiducian Group.
The numbers: In new proceedings launched in the NSW Supreme Court, the Australian Securities and Investments Commission (ASIC) alleges that FIMSL breached its duties as a responsible entity and engaged in misleading and deceptive conduct about its environmental, social and governance (ESG) fund.
ASIC is alleging FIMSL failed to act with care and diligence as the responsible entity of its Diversified Social Aspirations Fund and engaged in misleading and deceptive conduct relating to its description of how the fund works in its product disclosure statement (PDS).
The fund was established to meet client demand for a ‘socially responsible’ or ‘ethical’ investment option and was available for investment between 2015 and 2024. It selected investments by using underlying fund managers or underlying investment funds, which had their own bespoke ESG methodologies and tolerance thresholds for choosing investments. ASIC alleges these processes did not align with the approach outlined in the fund’s PDS.
ASIC also claims the fund's PDS contained false and misleading statements that it would monitor the portfolio exposure and investment styles of the underlying funds in circumstances where FIMSL did not have the requisite information to conduct that monitoring.
ASIC said that FIMSL failed to comply with its compliance plan when it did not record and lodge investor complaints, and when it failed to address investor concerns that the fund held investments in companies such as BHP, Rio Tinto, Woodside Energy, Newcrest Mining and Orica.
ASIC is seeking declarations, pecuniary penalties and adverse publicity orders.
In an ASX announcement this morning, Fiducian Group said it is "closely reviewing the court documents and the allegations made by ASIC".
The company noted that its Diversified Social Aspirations Fund ceased to operate in May 2024 due to a lack of scale. At the time of closing, the fund had $15.57 million in funds under management and 158 underlying investors.
What they said: "We believe FIMSL’s governance of the fund provides a clear example of how not to run an ESG fund," said ASIC deputy chair Sarah Court.
"We will allege FIMSL took a perfunctory approach to its oversight of the fund, attracting investors with claims it made no effort to validate, and in failing to independently monitor investments in the underlying funds to ensure they were consistent with the representations in the [product disclosure statement]."
The sources: ASIC media release, ASX
