The Australian Securities and Investment Commission is taking court action in the Federal Court of Australia against Avestra Asset Management Ltd, the trustee of a number of managed investment schemes.

Avestra's schemes are managed funds that invest in shares and other financial products with approximately A$18.5 million of assets under management.

ASIC alleges that Avestra has persistently contravened its duties in relation to a number of the schemes, failing to act in the best interests of scheme members, exercise the required degree of care and do all things necessary to act efficiently, honestly and fairly.

Among other things, ASIC alleges that Avestra borrowed money on an unsecured basis from the property of its schemes and invested scheme property in entities and offshore funds connected to its directors without proper 'due diligence' or regard for the interests of members.

ASIC issued the first of two 'stop orders' on 10 August. It is now asking the court to appoint provisional liquidators or receivers to take control of Avestra's assets and report on, among other things, any suspected contraventions of the law, any losses suffered by scheme members, and whether the schemes ought to continue in operation (under a new responsible entity) or whether they should also be wound up.

ASIC seems to expect the latter, as it also claims to be seeking 'final' court orders to wind Avestra up "on a just and equitable basis."

The first hearing of the matter begins today.