Bathla Group, one of Sydney's largest residential developers, entered voluntary administration in late August after governments refused to deliver a bailout package.
As part of its investigation into the network of financing behind the Western Sydney-based developer, the Australian Securities and Investments Commission singled out Adelaide-based lender Angas Securities and issued it with interim stop orders on Monday.
Angas did not adequately inform investors about its vulnerable financial position arising from its loans to Bathla, which contributed to $1.4 million in losses in its Prime Income Fund in financial year 2025/26, the regulator said.
But Angas executive chairman Andrew Luckhurst-Smith claimed the fund had very little exposure to Bathla and had lost no money from its loans to the developer.
When approached by ASIC to detail its exposure, Angas mistranscribed a column in a spreadsheet provided to the regulator, Mr Luckhurst-Smith said.
The loan losses in the Angas Prime fund had no relationship to Bathla, he said.
"We can't put the toothpaste back in the tube but we will engage with ASIC in a constructive way," Mr Luckhurst-Smith told AAP.
As a result of ASIC's stop order, Angas is temporarily halted from offering or selling interests in two of its funds.
The commission said it would consider whether to issue permanent stop orders after giving the company an opportunity to respond to its findings.
Mr Luckhurst-Smith said Angas's financial difficulties were the result of a separate transaction unrelated to Bathla.
The fund manager was undertaking a capital raising to secure enough money to meet its net tangible asset requirements, which Mr Luckhurst-Smith said was very advanced.
Commissioner Simone Constant said ASIC was working to understand how much Bathla's collapse was affecting mum-and-dad investors.
Under voluntary administrator Teneo, Bathla has stood down more than 200 staff and halted construction projects, owing $3.4 billion to creditors.
That figure includes $3.08 billion to secured lenders, $130 million to unsecured lenders, $145 million to the tax office and $4 million to employees.
ASIC has launched preliminary investigations following the company's collapse in a bid to trace the loans.
The developer's collapse highlighted the importance of private creditors being transparent, she said.
"Investors need clear and timely information about the risks they are taking on, particularly when circumstances change and private credit loans run into difficulty," Ms Constant said.
Ms Constant said the watchdog was continuing its broader crackdown on private credit.
In defending his government's decision not to bail out the company, NSW Premier Chris Minns said its finances were opaque and difficult to decipher.
According to Bathla's website, the group has 20,000 apartments and 7000 dwellings in its delivery pipeline, comprising a significant share of the NSW government's target of 75,400 new homes a year for five years until 2029.
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