Planners banned over Trio

Financial planners who directed $105 million into the doomed Trio Capital funds management business were banned from providing financial services for three years yesterday after the corporate regulator carpeted their behaviour.

By InvestSMART · 6 Jul 2011

By InvestSMART ·
6 Jul 2011

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FINANCIAL planners who directed $105 million into the doomed Trio Capital funds management business were banned from providing financial services for three years yesterday after the corporate regulator carpeted their behaviour.

The Australian Securities and Investments Commission found Peter and Anne-Marie Seagrim, the owners of the Port Augusta-based Seagrims, had failed to properly disclose to clients they stood to personally gain from directing business Trio's way.

ASIC also suspended the licence of the financial planner until November this year.

ASIC said that between September 2008 and October 2009, a total of 972 clients with $105 million in investments were directed into Trio Capital funds by Seagrims.

Regulators froze $426 million invested in Trio Capital in December 2009. It was later found more than $100 million invested in a Trio Capital fund, Astarra Strategic, had been stolen in Australia's largest superannuation theft in Australia's history.

The regulator found Seagrims had failed to ensure its advisers met legal requirements to check whether there was a reasonable basis for advising investors to switch into Trio Capital funds.

The regulator found statements of advice given to clients by both Mr and Mrs Seagrim failed to disclose an ''equity return agreement'' between Seagrims and the Trio Capital funds management business.

It also found both Mr and Mrs Seagrim failed to disclose advertising paid for by Trio Capital.

Yesterday's bans followed enforceable undertakings for two Trio Capital directors announced on Monday and the guilty plea of Trio Capital's investment manager, Shawn Richard.

Seagrims is a member of the Association of Independently Owned Financial Planners, which has been a fierce critic of aspects of the federal government's reforms to financial planning.

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Frequently Asked Questions about this Article…

What happened with Trio Capital and why are investors concerned?

Trio Capital was at the centre of a major funds-management scandal: regulators froze $426 million invested in Trio in December 2009, and more than $100 million invested in its Astarra Strategic fund was later found to have been stolen — described as Australia’s largest superannuation theft.

Who are Peter and Anne‑Marie Seagrim and what action did ASIC take against them?

Peter and Anne‑Marie Seagrim are the owners of Port Augusta‑based firm Seagrims. The Australian Securities and Investments Commission (ASIC) banned them from providing financial services for three years after finding they failed to properly disclose that they personally stood to gain from directing clients to Trio Capital funds.

How many clients and how much money did Seagrims direct into Trio Capital funds?

ASIC found that between September 2008 and October 2009 Seagrims directed 972 clients, with a total of $105 million in investments, into Trio Capital funds.

Why did ASIC say Seagrims’ advice was deficient?

ASIC concluded Seagrims failed to ensure its advisers met legal requirements to check there was a reasonable basis for recommending clients switch into Trio funds, and that their statements of advice did not disclose an 'equity return agreement' with Trio or advertising paid for by Trio.

Was any licence suspension or other enforcement action taken against the planner or Trio directors?

Yes. ASIC suspended the financial planner’s licence until November of that year. The bans on the Seagrims followed enforceable undertakings for two Trio Capital directors and the guilty plea of Trio’s investment manager, Shawn Richard.

What was Astarra Strategic and what happened to the money invested in it?

Astarra Strategic was a Trio Capital fund. More than $100 million invested in Astarra Strategic was found to have been stolen, contributing to the freeze of Trio assets and the classification of the case as Australia’s largest superannuation theft.

How does this case affect everyday investors who use financial planners?

The case highlights the importance of transparency and disclosure: investors should expect advisers to disclose conflicts of interest, payment arrangements, and to have a reasonable basis for recommendations before switching investments — failures in these areas can lead to poor outcomes and regulatory action.

Is Seagrims affiliated with any industry group and does that matter?

Seagrims is a member of the Association of Independently Owned Financial Planners. The article notes that this association has been a vocal critic of some federal reforms to financial planning, but it does not suggest the association was involved in the Trio matter beyond Seagrims’ membership.