ASIC won court orders to appoint liquidators to a trust, a land banking project, which had 125 investors with $22 million. Moreover, the VKK Investment Units Trust had acquired land near Melbourne that has been rising rapidly in value in recent years with Melbourne’s population surging to almost 5 million.
Reading ASIC’s press release on the matter and following mainstream media’s coverage (such as The Australian or Fairfax) you’d be misled to think ASIC was acting to protect investors’ interest.
However, at ANR we don’t accept press releases as fact. On the other hand we question anything and everything a company or government agency says in a press release.
Peter Kell of ASIC says the corporate watchdog has been focusing on land banking. Land banking has been a legitimate strategy for decades from which large property companies have made billions of dollars. Also, ASIC isn’t the property regulator, so shouldn’t they firstly become a competent securities regulator before interfering outside their jurisdiction?
He says “the ruling is a warning to those involved in unlawful schemes, including land banking (actually, why is land banking in recent years unlawful when no law has ever been changed to make land banking unlawful) and will move to protect investors and have these unlawful schemes removed.
Firstly, ASIC talks about protecting investors. Since when does liquidating land projects protect investors?
ASIC has now caused close to $100 million in losses to investors by unnecessarily liquidating numerous land banking projects when they could have easily acted in a manner to protect investor interests by requiring them to be licensed (which ASIC often prevents) or administrators appointed and land sold later when its value has continued to increase, so investors don’t lose money. After all, investors invest in land banking as they’re banking the land for 10-20 years to profit from.
Peter Kell says, “they are often unregulated and that investors have little protection if something goes wrong”. (Not correct, they are regulated by the property industry and property laws).