ASIC roundup: Misleading ESG claims, stop order, and fake ASIC adverts

The Australian Securities & Investments Commission’s latest actions and news, June 3 – ccc, 2024.

DDO stop order against Australian Unity Funds Management – June 5, 2024

An interim stop order has been issued against Australian Unity Funds Management Ltd, which stops the company from issuing or distributing interests in the Australian Unity Select Income Fund to retail clients.

The order was made in response to a retail client questionnaire with “significant flaws”, leading to a high risk that clients would not understand it and that it would therefore result in inaccurate responses and distribution of interests outside the target market.

The order is valid for 21 days unless removed earlier. To date, ASIC has issued 87 interim stop orders and one final stop order under the design and distribution obligations.

Cancelled AFS licenses

Aussie Wealth Super Pty Ltd – June 6, 2026

The Australian financial services (AFS) licence of Aussie Wealth Super Pty Ltd has been cancelled due to the company being voluntarily wound up.

XTrade.AU Pty Limited – June 6, 2024

The AFS licence of retail over the counter derivatives issuer XTrade.AU Pty Ltd has been cancelled because it failed to comply with general obligations. Between June 2018 and September 2022, the company was found engaging in unconscionable conduct, and failed to:

  • make sure its representatives complied with financial services laws;
  • have proper arrangements to manged conflicts of interest;
  • ensure that its retail product distribution was consistent with its target market determination;
  • guarantee that financial services were provided efficiently, honestly and fairly.

XTrade was also found prioritising its own interests instead of those of its clients. It also did not act in good faith, and fell short of the standards expected of an AFS licensee. The firm also failed to prevent representatives from engaging in misconduct over many years, and did provide them with adequate training.

XTrade applied to the Administrative Appeals Tribunal (AAT) for a review on the decision. The AAT has refused an application for a stay of the ASIC’s decision in advance of a final decision is made by the AAT on the substantive review application.

Court updates

Active Super made misleading ESG claims – June 5, 2024

LGSS Pty Limited, the trustee of the superannuation fund Active Super, has been found by the Federal Court to have contravened the law in connection with various misleading ESG claims.

Active Super claimed to have removed investments that posed too great a risk to the environment and the community, such as gambling, coal mining, oil tar sands, and avoid investments connected to Rusia. These claims were found to be false in connection with Active Super investments in various securities between February 1, 2021 to June 30, 2023.

At the time of the misleading representations, Active Super held direct and indirect investments in:

  • SkyCity Entertainment Group Ltd and Pointsbet Holdings Ltd (Gambling);
  • Gazprom PJSC and Sberbank of Russia (Russian entities);
  • ConocoPhillips and Shell Plc (Oil tar sands); and
  • Whitehaven Coal Limited and Coronado Global Resources (Coal mining).

However, it was also determined that Active Super did not engage in misleading representations in relation to companies involved in the production of packaging used for tobacco products, and that the specific representations in its Sustainable and Responsible Investment Policy were not misleading in regards to Russian or oil tar sands investments.

A penalty will be set at a later date.

 “ASIC took this case because it sends a strong message to companies making sustainable investment claims that they need to reflect their true position.”

Deputy Chair Sarah Court

Block Earner relieved from penalty – June 4, 2024

Block Earner, trading under Web3 Ventures Pty Ltd, has been relieved by the Federal Court from liability to pay a penalty for its unlicensed offering of the crypto-related product ‘Earner’.

The Court found the company’s contraventions serious. However, it also determined that it had acted honestly and not carelessly during its offering, and therefore relieved it from having to pay a penalty.

The company was earlier found to have provided unlicensed financial services and to have operated an unregistered managed investment scheme between March to November 2022.

ASIC is reviewing the decision.

ASIC news week 23


Chair Joe Longo made an opening statement at the Senate Economics Legislation Committee, 2024-2025 Budget Estimates on June 4, and started by welcoming the additional funding ASIC received from this year’s Federal Budget. This is set to “further enhance” ASIC’s work, and to support government priorities, Longo said.

The funds will be deployed to stabilising and upgrading business registers – with the ATO having transferred responsibility for these to ASIC In May.

The Commission is also striving to be a leading digitally enabled and data-informed regulator by 2030, and has commenced a digital transformation program in order to meet this objective.

“We will now move to implement these initiatives, including a new ‘threat intelligence platform’ to improve information collection and real-time detection of internal and external cyber threats.”

Scam alert: Fake ASIC logo on social media scams

The ASIC logo is currently being misused in advertisement to promote fake investments on social media, and the Commission is warning consumers not to trust or click on such adverts. The logo has been found deployed to market some stock market trading courses. Claims of endorsement by ASIC have also been used in cold calling as well as in Telegram impersonations of a ASIC social medial channel.

ASIC says that all these are fake, and that the Commission would never endorse a product or training course, and does not have a Telegram account.

Financial hardship research

5.8 million Australians have struggled to pay back loans and debts, yet few ask – or know to ask for help, new research has shows. More than half (55%) didn’t know that they were entitled to ask the bank or lender for financial hardship assistance, and only 20% said that they had sought assistance. Three out of 10 say that they would not seek such assistance, and 42% would rather sell belongings and assets, or get a second job (40%) before applying for help.

To create more awareness and encourage borrowers to seek help, ASIC’s Moneysmart is launching the campaign Just Ask! Hardship Help is available.

“Australians facing financial hardship should reach out to their bank or lender and ‘Just Ask’ for help. Seeking financial hardship assistance is a right, and lenders are required to respond to every request for hardship assistance,” said ASIC Commissioner Alan Kirkland.