Former Trio Chief Says Planners to Blame for Collapse

In 2011, Shawn Richard was sentenced to prison for at least three years following the collapse of Trio Capital. Richard was then chief executive of the investment company. Trio Capital apparently lost $100 million of its investors’ money in 2009.

Now, the former chief executive is saying that many of the company’s financial planners were also to blame for the collapse. His claim was entered into the Parliamentary Joint Committee (PJC) on Corporations and Financial Services last April 27.

Richard said that about 95 percent of financial planners advised SMSF investors to put their money in the company’s Astara Strategic Fund. They were also advised to also use margin facilities to invest into the ASF to double the exposure.

Those who have done so were not savvy enough to take control of their investments and were 100 percent reliant on their planners.

Richards also said that the guidelines from the Australian Prudential Regulation Authority on superannuation liquidity have not been thoroughly scrutinized. This meant that some funds do not meet the requirements for liquidation.

The former chief executive said they did a great job convincing the regulator that they do. He added that this has been proven during the global financial crisis. Richard also expressed confidence that he can easily identify superannuation funds that would fail the liquidity test.

Richard also claimed that the lack of check and balance has been taken advantage, citing that this is the main reason while Trio crumbled.

He suggested to increase transparency in the industry or at least enforce measures for handling superannuation funds, as well as hedge funds, particularly when an investor goes to a third party fund manager.

PJC, the investigating committee, is reportedly going to release its recommendations next week.

Tagged Shawn Richard, Trio Capital