Wednesday, January 6, 2010

Astarra: Don't blame the regulator

Here is an article which blames the regulator for allowing Astarra to go on as long as it did. It is not the only such article.

The article praises the seemingly heroic blogger for uncovering the problems.

Well the article is flat wrong.

1). The regulator it seems has acted with the greatest speed and integrity in uncovering this mess. I have no complaint whatsoever about the regulator.

2). Whilst my letter was the proximate trigger for the discovery of the problems at Astarra I claim no special genius. Sure I worked it out - but it was not complicated. Moreover a reader of this blog tipped me I should look.

I used not to have a high opinion of the Australian regulator - but on this instance I have no complaints whatsoever.

Blaming the regulator in this case is just lazy journalism.



Anonymous said...

I may be wrong, but I think this is not a case of lazy journalism.

If it is assumed that the purpose of journalism is always to uncover the truth and to accurately represent that truth, then yes, this is lazy journalism.

However, I think this by no means always the purpose of journalism.

Journalism is often about *entertainment*. About capturing the heart and mind of the reader, about *making a sale of the periodical in question*.

And that means you need a *story*, a story moreover which plays to the human condition - incompetent big brother regulator, heroic individual, etc, etc, etc.

This is in fact *high quality* entertainment journalism.

John Hempton said...

You may be right - but the real Astarra story is FAR more interesting than that piece of entertainment.

It just takes a little to uncover it.


Ad Clerum said...

Speaking of nothing, i noticed that the blog where out of business here in Scandinavia for two perhaps three days. All i got where a standard error from blogger that this blog didn't exist. This where the first time for me, any comment?

John Hempton said...

Yes - the blog was out because Google blocked it as spam.

That was later fixed after the press wrote criticising Google.

Felix Salmon deserves especial thanks.


Anonymous said...

I have to disagree. The regulator would have received the core proofs in the first place for Shawn and Eugene to assume their lofty positions. If you could uncover this in 40 minutes, why couldn't the army at the ASIC do so before people invested?

Anonymous said...


Given that you picked up a lot of imformation from the resumes of the people running the fund, how did the company get a licence to operate in the first place?

Unknown said...

The ASIC regulators should have caught this before it happened, that much is sure. Dereliction of duty clear and simple.

Once Mr. Hempton blew the whistle (and the story could not be supressed) ASIC did indeed do their job.

The question going forward is who will pay for the mistake?

owl said...

would you think to open a -Web Site-instead of this cool blog !?
how could you live in this country !
(foreign debts),(budget deficit),(consumption),(construction),(house prices) ALL ARE UP!
(credits),(profitability),(commodity prices).(production)...ALL ARE DOWN !
England is finished. .China will be the
new owner of this country.!
hopefully they won't fluster.

Oliver Townshend said...

Regulators can't be everywhere testing every non-ADI investment. That's the job of analysts, financial advisers and (maybe) the press. With all the information out there and people looking at investments, there should be enough eyeballs to ensure that the whistle can be blown, at which point we want the regulator to then take action.

Which is what happened here.

Anonymous said...

Hey there John,

Don't conflate the fact that journalists delberately avoid the obvious proximate issue, with incompetence.

They - being part of the entertainment industry - do precisely as they are told, or else their mortgages dont get paid.

Just as nobody would touch the minister's-daugher sex tape (when the then-Minister-for-Immigration's opinion became crucial in the deportation or otherwise of some Mossad lads), nobody will dare touch the involvement of Bigmouthed Joe Biden in shady financial dealings in Straya.

Seriously... our overlords are no longer subject to the rule of law. If you think otherwise, then dare to have a crack at them... the last thing you see will be a red spot on your chest.



Anonymous said...


I noticed that platinum have put the short back on the Japanese Bonds, which reminded me of your post from a while back.

What do you think? Good Move? And would you do a similar thing with your fund?

Anonymous said...

There has been an increased amount of media attention of this issue.

I think the key is identifying the trigger that would start the process.

Here is one article:

marlinhunter said...

Im one of the dumb sods who invested their hard earned cash into Astarra on advice of my trusted financial planner. What i'd like to know is when its all going to come to an end. The whole saga has been draging out for a long time now. My chance of getting any of my money back are getting smaller and smaller. But in the mean time the lawyers on the leagal end of it all are getting fatter and fatter at my expence. Im sure that if any of the money is found its going to be swallowed up in legal fees and the cost involved in appointing a liquidator to distribute the non existing funds. Surley there must be other people out there (over 100 million dollers worth to be precisce)who feel the same way, is there some way we can unit to try to push things along. Also why am I still paying people to answer the phone at Astarra Im sure that a luxury I can no longer afford.

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The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.