Equititrust acknowledges potential conflict in funding roles
Colin Kruger Sydney Morning herald
January 10, 2011
THE mortgage fund operator Equititrust faces a conflict of interest as it raises $50 million from new investors to aid a fund which has been frozen for more than two years with $240 million of investor money.
A portion of the fresh funds raised was expected to be used to pay distributions to the frozen Equititrust Income Fund and to redeem unit holder investments in that fund, the company said.
EIF was one of many unlisted investment vehicles that were forced to freeze redemptions in 2008 to prevent mass withdrawals when the government placed a guarantee on bank deposits.
In a product disclosure statement inviting investors to the $50 million Equititrust Priority Class Income Fund (EPCIF), the company admitted it ''will potentially be in a position of conflict'' in its roles as responsible entity for both the lender, EPCIF, and the borrower, the frozen EIF.