Even by the recent standards Aurora Funds Management has set itself, Monday morning's release to **promotion blocked** was extraordinary.
The hijacked funds management group revealed that over the weekend it discovered that $1 million of the $10 million of investor funds in its listed Property Buy Write Fund (AUP) had been moved without authorisation.
The Victorian Police and the Australian Securities and Investments Commission had been notified. Beyond that there are scant details, and investors are no doubt eager to learn exactly what transpired. But the very fact that this could happen to 10 per cent of the assets in a managed fund should raise serious questions about the governance at the once respected fund manager.
Aurora is a small player in a large industry, but The Australian Financial Review has been forced to take a keen interest in developments over the past 18 months. This is because the group has appeared to make a mockery of the governance infrastructure that has been put in place to protect the interests of investors in managed funds. A managed investment scheme or fund that takes investor capital is required to appoint a Responsible Entity, which acts as a check on the manager on behalf of investors.
In Aurora's case the funds management company, which charges investors fees to manage their money, and the RE that is meant to look out for them are one and the same. This is not uncommon but a series of events led investors to seriously doubt whether the RE was indeed acting in their interest, and not that of the fund manager ie themselves.
Early last year, after an investing mishap, Aurora froze the main fund, with good reason. But after some time, investors began to question if it was convenient to keep the funds frozen and charge fees while the management company was on the block. When Aurora did allow redemptions, it placed a prohibitive fee, further infuriating investors. Their anger led to a push to replace Aurora as the RE but they were narrowly defeated. Just before the vote, Aurora expanded the units on issue. ...........{ Click to go to article)
