Melbourne Securities Corporation Limited has paid $13,320 to comply with an infringement notice issued by the Australian Securities and Investments Commission (ASIC) in which ASIC alleged it made misleading statements regarding its Bloom Climate Impact Fund.
From March 2022 to June 2023, Melbourne Securities, as trustee and responsible entity of the Bloom Fund, made statements in the Fund’s Product Disclosure Statement (PDS) that said the Fund would seek to avoid the investment of the Fund’s assets in a range of excluded activities, including in fossil fuels.
Despite this, the Bloom Fund used revenue thresholds which allowed it to invest in companies that derived up to 33% revenue from excluded activities, such as fossil fuels. ASIC contends these revenue thresholds were not disclosed to investors and were contrary to the statements in the PDS.
The regulator believes that applying a negative screening process which allows a company to derive up to 33% of its revenue from an excluded activity is not seeking to avoid investments in those activities.
ASIC alleges that as a result of the application of revenue thresholds, the Bloom Fund acquired and held a direct investment in General Electric Co which derived 16% of its revenue from fossil fuels in the 2022 financial year.
General Electric represented 0.96% of funds under management when acquired in March 2022. It was divested in May 2023.
ASIC notes that payment of an infringement notice is not an admission of guilt or liability.
The Bloom Fund was registered on 15 February 2022 and was terminated on 8 June 2023. As at the date of its termination, the Fund had approximately $1.7m in funds under management.
