(14 April 2011 –Australia) Government compensation will be given in the order of A$55 million to investors with regulated super funds caught in Trio Capital scandal in 2009, but those with self-managed super funds will get nothing.The result highlighted the hugely different compensation rules for people caught up in the Trio Capital scam – started by an out of control Albury fund manager that allowed two hedge funds to rip off investors.
The effect on investors had been devastating, but assistant Treasurer Bill Shorten had flagged a review of a compensation scheme to cover all, which is due by June 30.
In September 2009, Capital Bronte blogger John Hempton, contacted authorities with his suspicions of Trio Capital when he saw magically even returns in the Trio hedge fund, Astarra Strategic.
By December, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority had stepped in and the massive untangling job began.
What eventually emerged was a tale of global fraud involving a bunch of international penny stock scammers.
Using elaborate corporate structures in Caribbean tax havens, Astarra Strategic spirited away about A$125 million, with ASIC eventually finding a lawyer based in Hong Kong, Jack Flader, playing an instrumental role.
As the digging continued, 70 investors in a second Trio hedge fund, ARP Growth, were found to have sustained losses of more than A$50 million. Mr Flader’s local henchman, Shawn Richard, is facing sentencing on May 13 after pleading to two counts of dishonest conduct.
After the investigation, regulators froze over A$400 million locked inside Trio Capital. Gradually funds were awarded to new managers and investors were able to start retrieving some money as ACT Super, for super fund investors and liquidator PPB, however regular investors unpicked the mess.
ACT Super made an application for compensation for super fund investors to the minister last October.
The compensation under part 23 of the Superannuation Industry (Supervision) Act, but only to those who invested in Trio through APRA-regulated funds, it leaves investors who had been tipped into Trio through DIY funds without a cent.