The Australian Securities and Investments Commission (ASIC) has issued interim stop orders to prevent further investment into non-bank lender TruePillars’ investment trust over concerns about misleading statements, conflicts of interest and inadequate risk disclosures.

The stop orders prevent it from offering, selling or transferring assets in the Pooled Unit and Loan Units of the fund.

It comes amid an ongoing probe into the Australian retail private credit market, in which ASIC is looking at private credit funds’ transparency, governance, valuation practices, management of conflicts of interest and fair treatment of investors.

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The fund, promoted by T.P.R.E, invests in notes issued by a related party which provides credit for a range of purposes including equipment financing, business and trail book loans mezzanine loans and agricultural equipment, and it lends on a secured and unsecured basis.

ASIC said it made the interim orders “to protect retail investors from acquiring products under product disclosure statements that may be defective and not worded and presented in a clear, concise, and effective manner”.

The regulator said it is concerned that the product disclosure statements for the two classes of units may:

• omit information about the investments and terms of the investments of the fund
• not adequately disclose the types of conflicts of interest that may be expected to occur, and how these are managed
• fail to adequately disclose significant risks associated with an investment in the fund, including liquidity, withdrawals and valuation
• fail to adequately disclose the fees and costs of the fund
• contain misleading statements about income distributions, loss reserves, liquidity, risk and withdrawals

Read more: ASIC issues DDO stop orders against La Trobe private credit funds

ASIC said it will consider making final orders if the concerns are not addressed in a “timely manner”.

As part of its ongoing private credit surveillance, ASIC recently put a DDO stop order on two products offered under lender La Trobe Financial’s private credit fund, citing concerns that investors may be “acquiring a product that may not be suitable for their financial objectives, situation or needs”.

TruePillars has been contacted for further comment.

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