Misleading debentures: Fincorp again

After recently being investigated by ASIC for its misleading ads, Fincorp has now reached an agreement with ASIC over not disclosing investments it was making with the funds being raised in 2004.

The 2004 prospectus said that Fincorp’s funds were
invested in a range of residential and commercial mortgages. In fact,
the vast majority of the money was invested in property development
activities carried on by parties related to Fincorp.

ASIC put a
‘stop order’ on the 2004 prospectus in September 2004, which prevented
it from proceeding.

Fincorp Investments Ltd (Fincorp) has been required
to offer certain investors who invested with Fincorp in 2004 all of
their money back, including accrued interest, following legal
proceedings initiated by the Australian Securities and Investments
Commission (ASIC).

Fincorp raised approximately $75 million in funds
under its 2004 prospectus and could be faced with having to refund many
millions of dollars to investors who still hold their investments.

The Supreme Court of New South Wales has made orders by consent requiring Fincorp to make corrective
disclosure and offer a full refund to investors who invested under
Fincorp’s prospectus between 17 February and 9 September 2004. ASIC
estimates that more than 1,000 investors could be affected. 
Fincorp says some investors are happy with the investments while others have already matured.

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