Funds Update - 19 June 2026

In this Funds Update for 19 June 2026:

1. ASIC calls on private credit industry ahead of 30 June valuation refreshes 
2. Updated Regulatory Guide 234 released
3. Federal Court imposes $300 million civil penalty against CFD issuer
4. High Court finds that digital asset product was a derivative

ASIC calls on private credit industry ahead of 30 June valuation refreshes 

On 18 June 2026, ASIC issued a call to private credit funds to ensure their 30 June asset valuations are current, accurate and grounded in realistic assumptions.

ASIC indicated its expectation that boards, auditors and all participants across the private credit eco-system, including responsible entities and trustees, should assess current private credit and broader private market practices against ASIC's ten private credit principles and lift standards where needed. Notably, ASIC has called for participants to:

• challenge assumptions to ensure valuations are based on realistic and supportable inputs;  
• ensure financial reporting, audit and assurance practices support their 30 June valuations; and
• reassess asset values and related risks before waiting for formal defaults.

Following its 2026 surveillance of wholesale and retail funds, ASIC has been monitoring private credit through an eight-week voluntary survey concluding on 14 May 2026, targeted surveillance and engagement with expert panels and market participants. 

That survey collected responses from 22 managers covering 52 funds and around $76 billion in assets under management. While that was a limited sample, ASIC observed: 

• tougher market conditions (some credit deterioration, softer inflows, tighter liquidity buffers and macroeconomic pressures affecting borrower performance); 
• that weaker borrower conditions are increasing the risk that reported valuations do not fully reflect underlying economic conditions;
• that current market conditions are increasing conflict risk; and 
• that the use of inconsistent definitions reduces comparability and affects investors’ understanding of performance.

Poor practices in private credit remain a 2026 enforcement priority for ASIC. 

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Updated Regulatory Guide 234 released 

On 9 June 2026, ASIC published its updated Regulatory Guide 234 Advertising financial products and services (including credit) (RG 234). RG 234 sets out guidance for complying with legal obligations not to make false or misleading representations or engage in misleading or deceptive conduct.

The updated RG 234 includes the following changes: 

• new guidance reflecting ASIC’s enforcement and regulatory action, relevant to advertising conduct, since RG 234 was published in 2012; and
• consolidation of guidance from Regulatory Guide 53 The use of past performance in promotional material (RG 53). 

Following these updates, ASIC has withdrawn RG 53 so that all advertising guidance is now contained in RG 234. 

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Federal Court imposes $300 million civil penalty against CFD provider  

On 11 June 2026, the Federal Court of Australia handed down a $300.2 million civil penalty against a contracts for difference (CFD) issuer and its authorised representatives, for: 

• engaging in misleading or deceptive conduct and a system of unconscionable conduct under the Australian Securities and Investments Act 2001 (Cth); and 
• contraventions of the obligation to hold an Australian financial services licence (AFSL) and the duties of AFSL holders under sections 911A and 912A of the Corporations Act 2001 (Cth), (the Act), including the duty to ensure that financial services are provided “efficiently, honestly and fairly”.  

Between 2018 and 2019, the corporate authorised representatives (CARs) of the CFD issuer, marketed and issued high risk CFD products to retail customers, many in China. 

The Court found that the CARs:

• made misleading or deceptive representations to customers including vulnerable customers; and 
• failed to provide customers with adequate explanations about complex financial products and their associated risks and the CARs profiting from the customers’ losses. 

The CFD issuer and one of the CARs went into liquidation in 2020. The Court noted that if the penalties sought by ASIC were imposed, the likelihood was that those penalties would not be paid, or not paid in full, and that the other CAR would become insolvent.  The Court said that: 

• the penalties being imposed on the contraveners were undoubtedly high; 
• high penalties were warranted given the seriousness of the contraventions, the benefits derived, the damage caused by the contraventions and the absence of any material ameliorating circumstances; and 
• high penalties are needed to secure effective deterrence. 

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High Court finds that digital asset product was a derivative  

On 17 June 2026, the High Court unanimously found that an issuer’s fixed-yield digital asset product, called “Earner”, was a “financial product” under the Act requiring the issuer to hold an AFSL. 

The Earner product involved users transferring amounts in AUD to the issuer, which the user could invest into nominated cryptocurrencies. The Earner product offered a fixed rate of return paid in the relevant cryptocurrency which users could convert to Australian dollars.  ASIC commenced civil penalty proceedings against the issuer for not holding an AFSL, alleging the issuer provided unlicensed financial services. 

The Court found that:

• Earner was a financial product under the Act as it was a facility through which an investor made a financial investment; 
• it was sufficient that investors’ funds were used or intended to be used to generate a return for both the investor and the issuer; and
• Earner constituted a “derivative” under the Act because it involved an arrangement by which the consideration received by users was the amount in AUD that derived or varied in value by reference to the market value of the relevant cryptocurrency and the USD / AUD exchange rate at the end of the term of the Earner product. 

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