The Australian Prudential Regulation Authority (APRA) today announced it has accepted an enforceable undertaking from former Trio Capital Limited (Trio) director Natasha Beck.
Ms Beck was a non-executive director of Trio from June 2008 until Trio's collapse in December 2009. Trio was formerly the licensed trustee of five registered superannuation entities as well as the responsible entity of 24 managed investment schemes, including the Astarra Strategic Fund (ASF), a fund of hedge funds.
Ms Beck has acknowledged APRA's concerns that she failed to carry out her duties properly as director of a superannuation trustee. APRA's concerns included that Trio:
- failed to redeem investments in the Exploration Fund Limited (EFL), an offshore hedge fund, in circumstances where the EFL was a related party to Trio, issues had been raised by Trio's auditor as well as APRA about the valuation of the investment and Trio had failed to comply with the provisions in its Overarching Investment Policy dealing with hedge fund and related party investments;
failed to redeem existing investments in the ASF and made ongoing investments in the ASF, in circumstances where there were similar issues to those associated with the EFL investment, Trio had failed to adequately consider counterparty risk, risks of investing in offshore hedge funds and risks associated with the investment structure of the ASF through Deferred Purchase Agreements; and
caused the Trio superannuation entities' interests in the EFL to be transferred to the ASF pursuant to an in specie transfer, which resulted in the superannuation entities assuming the counterparty risk and other risks associated with the investment structure of the ASF.
Ms Beck has acknowledged that, having regard to the nature and extent of APRA's concerns, an appropriate period of disqualification to not act as a trustee or as a responsible officer of a body corporate that is a trustee, investment manager or custodian of an APRA-regulated superannuation entity would be five years. However, as Ms Beck has sought to resolve APRA's concerns at an early stage and has agreed to assist its investigation, APRA has agreed to accept her undertaking to remain out of the superannuation industry for a period of four years with a potential reduction to two years subject to her assistance with further aspects of the investigation.
Ms Beck accepts that, with the benefit of hindsight and with what has since transpired, she should have acted differently in relation to APRA's concerns. Ms Beck genuinely regrets the consequences that arose.
APRA Deputy Chairman Ross Jones said that the acceptance of an enforceable undertaking was an appropriate resolution for the matters between Ms Beck and APRA.
'APRA relies on superannuation trustees to carry out their duties and ensure they act in the best interests of members. Accepting an enforceable undertaking is an effective alternative to disqualification action and ensures those who fail to meet these duties do not continue to operate in the superannuation industry,' he said.
The Trio superannuation entities' investments in the ASF were valued at approximately $62.2 million as at 30 September 2009 and have not been able to be redeemed. ACT Super Management Pty Limited (ACT Super), the Acting Trustee, has determined that the funds have been lost due to fraud or theft.
On 17 December 2009, APRA suspended Trio as the trustee of its four superannuation funds and one pooled superannuation trust, and appointed ACT Super, a subsidiary of McGrathNicol, as Acting Trustee to manage these five entities. APRA suspended Trio and appointed ACT Super as a result of numerous breaches of Trio's licence conditions and it not being able to satisfy APRA's concerns regarding the valuation of superannuation assets.
On 13 April 2011, in response to an application by ACT Super and on the recommendation of APRA, the Assistant Treasurer, the Hon. Bill Shorten MP, announced his decision to grant approximately $55 million in financial assistance to over 5,000 members of the Trio superannuation entities as a result of funds being lost to fraud or theft. The full announcement can be accessed through the following link: Financial Assistance to Trio's Superannuation Fund Investors
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $3.7 trillion in assets for 22 million Australian depositors, policyholders and superannuation fund members.
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