Macquarie Investment Management has been slapped with a A$400,000 fine after a New South Wales court ruled it had failed in its duties to monitor the now-defunct van Eyk Blueprint International Shares Fund (VBI).
In a decision released last Wednesday, the NSW Supreme Court found Macquarie had breached its duties as a responsible entity (or RE – similar to the trustee company role in NZ) for the VBI fund on three measures:
- Failing to “exercise the degree of care and diligence that a reasonable person would exercise” in relation to three VBI investments over July 6 to October 12, 2012 valued at a collective A$30 million into Artefact Partners Global Opportunities Fund, a Cayman Islands-registered firm;
- allowing members to redeem or withdraw units from the VBI Fund when it was illiquid in contravention of the Corporations Act between 15 June 2013 to 9 September 2013; and
- failing to make adequate and timely enquiries in relation to van Eyk’s monitoring of the VBI Fund’s investment in Artefact between 18 February 2013 and 21 July 2014 (including not making adequate and timely enquiries as to why a full redemption from Artefact had not been paid between 1 January 2014 to 21 July 2014).
Macquarie had previously admitted the specific charges levied in a civil case initiated by the Australian Securities and Investments Commission (ASIC).
The shuttering of the VBI fund by Macquarie in August 2014 sparked the wind-up of the entire Blueprint fund series, which at one time topped A$2 billion, and eventually forced the once-dominant Australian fund researcher van Eyk Research – as well as its NZ operations – into liquidation later that year.
In a statement, ASIC Commissioner, Greg Tanzer, said the court ruling, which resulted in Macquarie paying the $400,000 fine plus $200,000 towards the Australian regulator’s legal costs, reinforced the importance of the RE responsibilities.
“Those obligations require responsible entities to have a supervisory and monitoring role in relation to funds, even where external investment managers have been appointed,” Tanzer said. “ASIC will take action against responsible entities when they fail to meet their obligations.”
The Australian corporate watchdog is continuing its investigation into van Eyk Research. Across this side of the Tasman, the Financial Markets Authority is also investigating the events that led to the failure of the van Eyk NZ business with a resolution expected shortly.