Australian Court orders Theta Asset Management to pay $2M penalty

The Federal Court in Western Australia has ordered Theta Asset Management Ltd, a provider of responsible entity and trustee services, to pay a penalty of $2 million, after findings that the company which is responsible for the Sterling Income Trust, violated the Corporations Act.

The Court determined that Theta contravened the Corporations Act on multiple occasions in authorising the issue of five defective Product Disclosure Statements for the Sterling Income Trust.

The Australian Securities & Investments Commission (ASIC) launched proceedings against Theta on December 11, 2019. The Court found that Theta breached the Corporations Act and failed to comply with its duties as a responsible entity. 

The Hon Justice McKerracher noted in handing down his judgment that the circumstances involved catastrophic losses sustained by investors. In total, between 20 May 2016 to 30 April 2018, $16,749,974 was raised from retail investors pursuant to the defective Product Disclosure Statements.