The Trust Company will assess taking action to recover losses of about $11.8 million suffered by three diversified funds formerly operated by failed financial services firm Trio Capital.
"We are still conducting an assessment, but it is action that we might take as responsible entity of the particular schemes to recover any damages incurred or caused during the previous operations of the schemes," The Trust Company head of responsible entity services Rupert Smoker said.
"We are considering, as our obligations require us to, to examine any claims that we may make out of losses the schemes have incurred."
Investors last year voted to install The Trust Company as the replacement responsible entity of nine unregistered and one registered scheme formerly managed by Trio Capital.
In preparing the funds' financial reports for the financial year ended 30 June 2010, The Trust Company found the Astarra Balanced, Astarra Growth and Astarra Conservative funds lost around $11.8 million because the products invested in the Astarra Strategic Fund (ASF).
"In preparing the financial reports, we have made a number of observations about the former responsible entity of the Trio funds. In particular, we note that there was a lack of evidence demonstrating that the former responsible entity had effective governance, risk and compliance arrangements," Smoker said.
"In particular, we note that the former responsible entity was the responsible entity of the ASF. The ASF is a registered scheme that has been the subject of the most significant fraud of superannuation money in Australia's history.
"An associate of the former responsible entity was Astarra Asset Management Limited, a company for which Shawn Richard was a director."
On 7 December 2010, Richard pleaded guilty to two charges of dishonest conduct in the course of carrying on a financial services business and admitted a third charge of making false statements in relation to financial products.
ASIC alleged, among other things, that Richard was involved in causing the ASF to put investors' money in overseas hedge funds in circumstances where he would personally receive a significant portion of the money for his own benefit and for the benefit of his company, Astarra Asset Management.
Smoker also said contrary to customer industry practice, the former responsible entity did not operate a separate bank account for each of the Trio funds and instead the cash of the funds was pooled in an omnibus account at the custodian.
"We also identified a number of mistakes in the former responsible entity's calculation of distributions from several Trio funds in the period. These mistakes were rectified by us before distributions for the period were made in February 2011," he said.
He said the other registered Trio funds, including Astarra Capital Protected, Astarra Cash, My Income Plan, My Growth Plan, Astarra Australian Equities Pool and Astarra Diversified Fixed Interest Pool, had no write-downs in fiscal 2010.
The nine registered funds had a gross estimated value of $155 million as at March 2011. The three diversified funds specifically had a gross estimated value of $77 million.
