Australian Corporate Bond Company Pty Ltd (ACBC) has paid $25,200 in penalties after ASIC issued two infringement notices for alleged misleading statements made in the promotion of Exchange Traded Bonds (XTBs) on its website between May to December 2017.
Following an investigation, ASIC was concerned that ACBC’s comparison of the key attributes of term deposits and XTBs represented an investment in XTBs as carrying an equivalent or substantially the same risk as investments in term deposits, while producing a higher return.
ASIC was concerned that the statements were misleading because the risks involved in an investment in XTBs are not equivalent to or substantially the same as an investment in a term deposit. For example, investments in a term deposit of up of $250,000, are protected by the Australian Government’s guarantee for Authorised Deposit Taking Institutions whereas investments in XTBs are not.
ACBC amended the promotional statements in response to ASIC’s concerns.
ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws. The payment of an infringement notice is not an admission of a contravention of the Australian Securities and Investment Commission Act 2001 consumer protection provisions.
Background
ACBC is the securities manager of the Australian Corporate Bond Trust and Theta Asset Management Ltd is the responsible entity. The two infringement notices were issued to ACBC on 7 December 2018 and paid by ACBC on 30 January 2019.
XTBs are a type of Exchange Traded Product (ETP) quoted on the ASX AQUA market. XTB securities are a unit in a trust that provides investors with economic exposure to the return of an underlying corporate bond issue on a fractionalised basis.
We encourage issuers to continually ensure that any advertising is consistent with Regulatory Guide 234. Advertisements that do not fairly represent the product, features and risks are misleading and/or deceptive, and ASIC will take appropriate action against this.