Why ASIC issued stop orders against TruePillars
ASIC has told private credit manager TruePillars to halt distribution of its product disclosure statements (PDSs) for two offerings.
The interim orders prevent the fund from offering, issuing, selling or transferring interests in the Pooled Unit and Loan Units of TruePillars Investment, a managed fund promoted by T.P.R.E Ltd.
TruePillars' website said: "Pooled units fund pools of loans made by primary lenders, providing all unit holders with a pro rata exposure to the pool of loans."
The fund has approximately $14.6 million assets as of June and provides investors with exposure to loans made primarily to small and medium sized Australian businesses. They do this by lending money to primary lenders, who in turn make loans to underlying borrowers. It provides credit for a range of purposes including equipment financing, rideshare financing, business and trail book loans, vehicles, and agricultural equipment.
TruePillars' website has not been updated since June 2023, at which time it disclosed that it had around $19.8 million in assets under management. This was across 422 loans totaling $18.9 million.
The PDSs and target market determinations on the website have also not been updated since 2021. Its Financial Services Guide is dated 2019.
TruePillars was founded in 2015 by John Baini and Dennis Hakme. Baini is listed on the website as chief executive of TruePillars, however his LinkedIn shows he stepped down from this role in June and is currently on sabbatical. He remains an executive director and responsible manager.
ASIC noted that the interim orders are to protect retail investors from acquiring products under PDSs that may be defective and not worded and presented in a clear, concise, and effective manner.
ASIC said that it is concerned that the TruePillars PDSs may be omitting investment information, not adequately disclosing conflicts of interest, failing to adequately disclose risks associated with investments as well as the fees and costs, and contain misleading statements about income distributions, loss reserves, liquidity, risk and withdrawals.
TruePillars has three investment pooled options: Go Fund with a minimum investment of $500 and a target return of 4.35%, Flow Fund with a minimum investment of $1000 over 12 months and target return of 6.10%, and Power Fund with a minimum contribution of $5000 and a target return of 8.10%.
The stop orders arose from ASIC's recent retail private credit surveillance, and it will consider making final orders if the concerns are not addressed in a timely manner.
This article first appeared on Financial Standard
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