The Australian Prudential Regulation Authority (APRA) has accepted a sixth enforceable undertaking (EU) from a former Trio Capital director.
The prudential regulator accepted the EU from John Godfrey yesterday.
Godfrey was formerly the licensed trustee of five registered superannuation entities as well as the responsible entity of a managed investment scheme known as the Astarra Strategic Fund (ASF), a fund of hedge funds.
He was also a non-executive director of Trio from February 2005 until June 2007 and chairman of the board from June 2005 to February 2007.
Godfrey is the sixth Trio director to give an EU to APRA, and it marks the first EU accepted by the regulator from an individual who left the Trio board prior to its collapse in 2009.
"APRA's investigation in relation to Trio is continuing,"APRA deputy chairman Ross Jones said.
"APRA intends to take action against any former Trio directors who had left the Trio board before its collapse in late 2009, who have failed to meet the high standards expected of them as superannuation trustee directors and have not acted in the best interests of members."
Godfrey has undertaken not to 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 without obtaining the regulator's prior written consent.
He has acknowledged APRA's concerns that he failed to carry out his duties properly as a director of a superannuation trustee.
APRA's concerns included that Trio failed to redeem existing investments in the Exploration Fund (EF), an offshore hedge fund, and made ongoing investments in the EF, given there was a lack of arms-length arrangements in place as the EF was a related party to Trio.
The regulator also expressed concerns over the investment risks associated with the EF and over Trio's failure to comply with the provisions in its overarching investment policy dealing with hedge fund and related-party investments, while it also failed to redeem existing investments in the ASF and made ongoing investments in the ASF, given there were similar issues to those associated with the EF investment.
Trio failed to adequately consider counterparty risk, the risks of investing in offshore hedge funds and the risks associated with the investment structure of the ASF through deferred purchase agreements, APRA said.
The Trio superannuation entities' investments in the ASF and EF have not been able to be redeemed and ACT Super Management, the acting trustee appointed to the Trio superannuation entities, has determined that the funds have been lost due to fraud or theft.
Godfrey accepts that, with the benefit of hindsight, and with what has since transpired, he should have acted differently in relation to APRA's concerns, and genuinely regrets the consequences that arose.
APRA has accepted EUs from five other Trio directors: Natasha Beck, Rex Phillpott, David Andrews, Keith Finkelde and David O'Bryen.
APRA's investigation in relation to Trio is continuing.
