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Fund Collapsed on Investors

Submitted by Trading Critic on Tue, 2007-05-29 21:35.
Australian Capital Reserve collapsed: all the investors are left with is whatever the Administrators can dig up and claim back

You know what? It collapsed. The fund collapsed and all the investors are left with is whatever the Administrators can dig up and claim back. Which fund? The fund that had unrealistic returns and benchmarks, the one that promised 109% return in three years. According to this SMH article, administrators have been appointed voluntarily to the company, Australian Capital Reserve (ACR) Group on Monday (28th May 2007). The fund has A$330 million invested with a total of about 7000 investors. An administrator called McGrathNicol has been appointed to review the property development investments of ACR to look for strategies to "maximize the potential return to noteholders, secured lenders and unsecured creditors alike." This company is the third property group to fall in recent years, previous flops include Fincorp and Wespoint.

"ACR was not unknown to the corporate regulator.In 2004, the Australian Securities and Investment Commission (ASIC)examined the prospectuses and selected advertising for debentures issued by 11 companies, including ACR and Fincorp, offering high-yields such as interest rates that were four per cent per annum above bank term-deposit rates. ASIC said high-yield debentures were typically a risky investment, and there was no guarantee that investors would get their money back. The corporate regulator expressed concern the advertising for high yield debentures was aimed at retirees, and featured images of happy older couples. ASIC also forced ACR to lodge a supplementary prospectus in November 2005 due to concerns about a lack of disclosure of ACR's financial position. ASIC also blocked a cash-strapped ACR from raising money from retail investors in March this year."

An Australian Capital Reserve (ACR) noteholder information session will be held on June 4 at venues in Sydney, Brisbane and Melbourne.

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