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Schemes bound to lose: ASIC

MANY investment schemes advertised as tax reducing are destined to fail, warns the Australian Securities and Investments Commission.

An ASIC spokesman said, at first glance, many of these schemes could look very solid.

“Slick marketing, ‘guaranteed’ product rulings and projected high returns can go a long way towards giving investors a false sense of security,” he said.

“It is important to always ask for a copy of the company’s prospectus or offer document.

“An investment adviser can then appraise the viability of the scheme, scrutinise the fee schedule and projected returns and assess the degree of risk.

“Investors should also check the validity of any product rulings with the ATO and research the history of the company and its directors through the ASIC web site at www.asic.gov.au or the ASIC infoline on 1300 300 630.”

The spokesman said that, during the past four months, ASIC had taken action against ostrich farming companies, an illegal cattle investment project, a forestry scheme and a film investment scheme.

ASIC inquiries into the cattle investment project revealed funds of $1.2 million were raised illegally and may have been used for unauthorised purposes.

Investigations into the whereabouts of the funds are continuing.

Investors in the scheme could also have discovered through ASIC’s Person Search that one of the company directors was also the director of an ostrich company liquidated in 1998 after losses of $6.5 million to both investors and creditors.

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