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APRA releases report on Trio investigation
Monday, 11 April 2016 |
http://www.financialstandard.com.au/news/view/81759814
The Australian Prudential Authority (APRA) has released its report on its investigation into the failure of Trio Capital Limited (Trio) and loss of up to $150m.
The investigation resulted in the removal of 13 former Trio directors from the superannuation industry for periods between 3 years 6 months and 15 years. One former director has been permanently banned from holding a senior role in the superannuation industry.
APRA's investigation into Trio focused on six related-party investments totalling approximately $150m, all of which were lost or were unable to be recovered. APRA's focus was on the conduct of Trio as a corporate trustee and the conduct of individual directors between November 2003 and December 2009.
As a result of the investigation, APRA found that Trio failed to conduct "adequate due diligence in relation to the Related Party Investments, made investments that were more favourable to the related parties than had the investment's been at arm's length and failed to adequately monitor the performance of the investments." The report also revealed that Trio's directors were identified as failing their duties and functions under the SIS Act, and not acting in the best interest of members.
The report noted that the outcomes of the Trio investigation can provide a number of lessons for trustees. APRA believes that the significant investment losses can be contributed to a number of key factors including:
- inadequate investment governance processes;
- failure to adequately manage conflicts of interest from dealings with related parties; and
- failure to have adequate controls to mitigate fraud-related investment risk
Following the Trio matter APRA argues that the introduction of prudential standards in superannuation, additional statuary duties imposed on trustees and directors and further guidance on fraud and risk management have helped better the regulation of the superannuation industry.