The van Eyk Blueprint International Shares Fund (VBI Fund) made investments of $30 million in 2012 into the Cayman Islands-based Artefact Partners Global Opportunities Fund.
The VBI Fund was one of a series of funds of which van Eyk Research was the investment manager, and Macquarie Investment Management Limited (MIML) was the responsible entity. Van Eyk Research is now in liquidation.
MIML suspended redemptions from the VBI Fund and three other funds due to their exposure to the VBI Fund on 1 August 2014.
The VBI Fund was terminated by MIML on 15 August 2014, with unit holders owed around $30.9 million relating to the VBI Fund, said ASIC.
"Since then, Artefact has repaid $20 million to the VBI Fund. MIML recently paid the remaining approximately $10.9 million plus interest to unit holders (less fees and winding up costs) and expects to recover the majority of that amount from Artefact's liquidator," said ASIC.
MIML has admitted to five contraventions of the Corporations Act.
ASIC and MIML have agreed that MIML failed to comply with its duties as a responsible entity by:
• failing to adequately address risks associated with the decision for the VBI Fund to make three investments into Artefact between 6 July to 30 October 2012;
• allowing members to redeem or withdraw units from the VBI Fund when it was illiquid in contravention of the Corporations Act and the scheme's constitution 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).
The NSW Supreme Court will hear submissions from both ASIC and MIML as to the appropriate penalty amounts, with the final penalty to be determined by the court.
MIML has released a statement noting ASIC's announcement on the court proceedings.
"On 1 August 2014, after MIML learned that Artefact, contrary to its investment mandate, had invested in an illiquid investment, MIML suspended applications and redemptions from VBI and the three diversified van Eyk Blueprint funds which had invested in VBI," said MIML.
"MIML then terminated the relevant van Eyk funds, returning to investors all of the liquid assets in the funds, and put significant resources into realising the remaining illiquid assets of the funds for investors.
"By April 2015 MIML had already returned to investors approximately 89 per cent of funds in the VBI Fund, with the balance of these proceeds last month being returned to VBI investors, resulting in a 102.2 per cent return on VBI’s unit value at termination.
"Following this significant recovery action by Macquarie, the entire $30 million, which van Eyk decided that VBI invest in Artefact in 2012 has now been returned to investors," the statement said.
"ASIC and MIML have agreed in today’s settlement that, as Responsible Entity, MIML did not exercise sufficient care and diligence in relation to van Eyk’s decision to invest in Artefact, the ongoing monitoring of van Eyk in relation to Artefact, and VBI’s liquidity.
"MIML further notes ASIC’s acknowledgement of the efforts made by MIML to have investors’ funds repaid. This matter arose within MIML’s non-core outsourced Responsible Entity business which MIML is no longer pursuing," MIML said.