# Managed fund co-operation group



## mellifuous (19 October 2009)

Welcome to this new thread which has been created in the hope that members all all managed funds might find ways of solving issues of common concern.  

Issues such as  how to put pressure on government for a changes in applicable  law in order to give (better) protection to investors in managed funds, how to pressure ASIC to look into alleged wrongdoings by fund managers, and how to gain co-operation with the media to present the plight of investors in a constructive and beneficial way.

If you are a member of a manager fund, or if you are not but feel you are able to contribute in a constructive way, then I sincerely  hope you will join to express your view and co-operate to alleviate our mutual concerns.

This new thread is a joint effort of members of FMF and MFS at this time.


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## seamisty (19 October 2009)

This has been posted on the OCV thread but I want it included on this thread as a record of investor grievances.
The following is a headline in todays Financial Review (I can' access the full article);;;Creditors shiver as ATO freezes Octaviar funds
Monday, 19 October 2009 | The Australian Financial Review | Lisa Allen 

The Australian Taxation Office has ordered the freezing of $60 million worth of Octaviar funds to prevent creditor access.;;;

I want to know why the ATO's claim would rank ahead of other OCV creditors' claims? PIF investors had a legally binding agreement with OCV by way of the $50 mill support facility which was triggerd in FEB 2008, before there was a list of other creditors. Why should the ATO have extra powers that excludes and is detrimental to the rights of the 'little man'? Seamisty


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## mellifuous (19 October 2009)

Hi Seamisty, I think the ATO ranks ahead of every other entity apart from salaries/wages - the tax act is the only act more scarier than the corporations act.



My concerns about how the FMF was run are generally encapsulated in my three submissions to the parliamentary enquiry:-

http://www.aph.gov.au/SENATE/committee/corporations_ctte/fps/submissions/sub182.pdf

http://www.aph.gov.au/SENATE/committee/corporations_ctte/fps/submissions/supsub182a.pdf

http://www.aph.gov.au/SENATE/committee/corporations_ctte/fps/submissions/supsub182b.pdf

There is at least one more that I'm aware of:-

http://www.aph.gov.au/SENATE/committee/corporations_ctte/fps/submissions/sub355.pdf

Three of the most important issues were (1) conflicts of interests, eg. the deconsolidation of the fund, (2) disclosure, eg. limited disclosure in financial statements, and (3) related party transactons.

We didn't know the name (and structure/ownership) of all lenders.  We didn't know how much debt there really was, and we didn't know the true status of loans.

Rolling over of loans was a big problem for us because it allowed the manager to carry on with what I regard were the 'idiotic fundamentals of the fund', that is, continue to lend to defaulters based on a belief that pressing defaulters for payment would not return the money in the end: that is, the finished product would return the money regardless of the state of default.

There are just a few issues that might be of interest to flesh out some paragraphs to a final document somewhere.


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## mellifuous (19 October 2009)

Ok, I know I'm a prolific poster, but please let me remind you that I have a lot of money at stake in the FMF and I'm concerned about getting back as much as I can.  I'm not out to do anything but  better my chances - I would be foolish to do otherwise.

I'm not for replacing the manager or for winding up the fund (at this time), but I am for improving the rights of investors (particularly in the FMF), ensuring more current information is given to investors, ensuring a more active role by the regulator wrt managed funds, and ensuring (as best I can) the return of at least a reasonable proportion of our investments which have been decimated at the hands of the funds' respective managers.

In the FMF the manager stated in its BRW release that investors would be given a choice about the future of the fund.  Now, just days ago the manager stated that it wasn't going to release the promised 'reports' on the reviews, rather a summary report.

How many months do investors think we sould wait to get a promised report on the state of the FMF?   How do investors think that we will be able to make a decision on the fund's future without a comprehensive report?  Are there investors who think we've not going to get such a report?

Even hardship payments seem not to be forthcoming until next year (if at all) - but the manager will take its millions before those in need, even though the manager knew the need of members before it took the fund - cleary those in need were critical to Trilogy's success - but those in need are still in need.

Interstingly, 'occupants' (not owners) of Grande Pacific have been promised tenure and the manager has experessed the view that it will run Grande Pacific as a long term business even before we've been fully advised (by way of a comprehensiive report) and  without  any decision by members about the long term future of the fund: a decision we can't make without the reports which are not forthcoming (at this time).

These sorts of action alone give rise to concerns  which FMF members cannot oppose/resolve  because we simply lack cohesion, and we get no support from ASIC because we lack the overall 'managed fund' collective to press ASIC  and the government into action to help/protect us.

ASIC would say that managers comply with the law, and they probably do - but, 'compliance' didn't help us before,  We know that ASIC will act with enough public pressure, and  Storm investors prove the point with their successes in getting a lot (properly) done for them.

I know that many people are lookers, and are so  for a myriad of reasons, but I want to express my view that 'lookiing' does not bring about change, only actions do.  If you're a looker and you have money at risk in a managed fund, and you feel you can't add to the content of the thread, then perhaps you might like to post a message of support.

Readers should also note that we will need the support of funds' members' names  in order to give effect to documents sent to government and to the media on behalf of a 'group'.

It's early days yet.

The one thing we should be able to agree on is that we have lost an enormous amount from our respective investments - I'm sure we'll also agree that the losses should not be put down solely to the global financial crisis.

Thanks.


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## k.smith (19 October 2009)

Across the forums and action groups there are many angry investors who are trying to make themselves heard. We should combine our efforts. There are many issues that we share in common

1. Lack of disclosure, such as accrued accounting where the true financial state of the fund is obscured from investors, where interest and capital paid are not clearly presented in financial reports

2. The lack of action on behalf of unitholders by the regulators -e.g  the inaction on  recent comments made in the media regards to the value of the PIF units on the NSX
http://www.theaustralian.news.com.au/story/0,25197,26149214-601,00.html

3.Conflicts of interests  e.g the deconsolidation of the CPFMF from the parent company. 

4.Related party transactions...

5. The role the auditors play.....
http://www.ilovebig4.org.ua/2009/06/big4s-billion-dollar-errors-lawyers.html
".....However, in some cases auditors appear content to authorise financial statements which are incorrect, due to incompetence, personal interest or a combination of the two. As with ratings agencies, the independence of auditors has been called into question, given that they are being paid by the very people they are supposed to be monitoring.

Auditors are officially appointed by a board's audit committee to review management accounts, but in many cases that company's board is on very friendly terms with its executive team. As such, questioning the auditors' conclusions may be akin to questioning the performance of management....."

We should aspire to draft a collective letter, from collective unitholders, from collective funds, and get our story into the open.


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## seamisty (19 October 2009)

mellifuous, being a prolific poster is fine if at the end of the day attention is drawn to the lack of regulation and the total disregard to the thousands of investors left in limbo because not one single govt appointed employee, journalist, or anyone else in a delegated position to look after our interests do nothing but continue to zip their lips, plug their ears and put their sunglasses on!! What does it take to expose those responsible for blatantly misleading and offering nothing but broken promises and highly inflated figures to achieve their own financial reward? For example, recently Mr Steven Pritchard, chairman of  the NSX  reported the following incorrect information regarding the Wellington capital Premium income fund:::
National Stock Exchange to list frozen funds;; Anthony Klan | October 01, 2009 
Article from:  The Australian 
THE nation's second largest share trading platform, the National Stock Exchange, is preparing to list dozens of frozen mortgage and property funds - holding hundreds of millions of dollars - in a bid to return funds to desperate investors.

NSX chairman Steven Pritchard said the exchange was negotiating with several property and income fund managers representing "more than a dozen funds", which were seeking to list their frozen funds in a bid to provide liquidity to investors. 

"Many of these frozen mortgage and property funds hold good-quality assets and I have no doubt many investors in those funds will receive all their capital back as well as their distributions," Mr Pritchard said. 

"This is about providing a liquidity mechanism for investors who want to exit the funds." 

In October last year more than 30 funds, holding more than $25 billion on behalf of 250,000 investors, froze redemption facilities after a run on non-bank deposits. 

That run on mortgage and property funds was prompted by a federal government move to guarantee bank deposits amid the turmoil in financial markets. 

Mr Pritchard said listing on the NSX, which operated similarly to the Australian Stock Exchange but typically attracted far smaller companies and lower levels of transactions, would help improve liquidity. 

"With the inability of investors to currently redeem their investments in the many mortgage and property funds which have suspended redemptions, NSX Ltd and its subsidiary exchanges are in an ideal position to list the securities of those funds," Mr Pritchard said. 

He said the frozen Octaviar Premium Income Fund - which had raised $750m from investors and listed on the NSX late last year after the collapse of parent company MFS Ltd - was an example of how frozen funds could trade. 

Units in the fund began trading at 11c on listing with the NSX and are now selling for 28c, although they are relatively thinly traded. 

Consumer groups yesterday expressed concerns cash-strapped investors desperate to access funds might sell their frozen funds for much less than they were worth. 

"The danger here is desperate investors might be forced into selling their investments for much less than they're worth because they can't afford to hold out until funds are unfrozen," consumer advocate Denise Brailey said. 

"Investors looking to get out of frozen investments need to be very careful about the price they seek to sell at. 

"Just because some funds are frozen now does not necessarily mean they are worth far less than they were before they were frozen," she said. 

One of those aggrieved investors holding frozen funds is Roy Abrims, the former chief executive of photographic chain Rabbit Photo, who personally has about $540,000 invested in the AMP Capital Enhanced Yield Fund which he has been unable to withdraw. 

Mr Abrims said he would rather the AMP Capital Enhanced Yield Fund move to unfreeze redemptions than list on an exchange. 

The AMP Capital Enhanced Yield Fund is not understood to be considering listing on any exchange.:::

To my knowledge, Mr Pritchard was contacted re his mistake:ear Mr Pritchard,
I am contacting you in response to the media article http://www.theaustralian.news.com.au...14-601,00.html regarding the listing of other frozen mortgage and property funds. I am a investor in the Wellington Capital Premium Income Fund, previously Octaviar PIF, currently trading on the NSX as PIN. I and other investors would appreciate it if you would please not mislead other investors in these type of funds by using our Fund as an example as to the success of how frozen funds can trade as your figures were totally incorrect and misleading.
Upon listing the units traded at 45cents, one trade of 2,000 units and have steadily declined to trade at around 10-12 cents at present, reaching as low as 0.056 cents per unit with a total of 99 trades since listing almost a year ago. From first hand knowledge of some investors who have sold on the NSX, they sold because they are destitute or have serious health issues. One investor had to sell a parcel of units to buy medication for a terminal illness. The majority of investors of this Fund were vehemently opposed to the listing at all but were left with no alternative.
Wellington Capital has been the Responsible entity of the Fund since May 2008 promising PIF investors distributions, a buyback of units and an increase in unit value. To date we have not received a cent in distributions, no buyback has occurred and unit values have declined by at least 6 cents. Redemptions are non existent and investor morale is very low.
Having been 'conned' by Wellington Capital' I do not appreciate reading media articles with further misleading information in relation to our Fund. Perhaps a retraction is in order or at the very least in future please do some research before making incorrect statements in the public domain.::::
Yep , as usual, no response and no media retraction, even after Asic, media watch and News Ltd were notified as was the Gold Coast Bulletin and the NSX. So it is ok to print unresearched incorrect data but when you are notified that the information  is misleading and in fact not true, nothing is done to rectify the problem. NO ONE has the GUTS to admit publically that they GOT IT WRONG!!!! When and how do we make them accountable?
Today I again contacted the NSX as follows:::
I am an investor in Wellington Capital premium income Fund trading as PIN and am concerned that our RE has not updated current and potential investors to the fact that Wellington Investment Management Limited as former RE of the PIF is still a named respondent in the Class Action. It is my understanding that WC reneged on the negotiations with Carney Lawyes and was not removed as a result.  I consider this to be price sensitive information and should be publically revealed:::: I included a contact no for Carney lawyers and have had no acknowledgement from the NSX.
Who regulates the NSX? I quote from the NSX:::REGULATORY NEWS SERVICE 
The NSX Listing Rules requires that listed entities report market significant events to the NSX. This information is important to keep the market informed of their activities :: I have run out of time but will continue to post other examples when time permits. Regards, Seamisty


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## mellifuous (20 October 2009)

It seems my subconscious has been working overtime again - and thanks to the remnants of my neural connexions, I've awoken with what might be the key issue in mind, and that is THE FROZEN FUND and a way to resolve the problem.

While there are issues that need to be addressed from the past, it is the present that is most pressing to us all.

In my submissions to the Inquiry I suggested that an independent entity be appointed to assess any frozen fund to determine whether the fund should be wound up or continued in some form or other.

This entity should publish a complete report on the fund, the assets, the market, and management, and make enforeable orders as to the future direction of the fund, with such orders monitored for compliance.  

In the event a manager intends to declare a fund frozen, then at the time of such a declaration,  that manager should be compelled to publish a strategy which it intends to follow  in order to bring the fund back to liquidity.   The proposd statutory body would take the manager's proposed strategy into account when assessing the fund.

I've noticed that the managers of MFS / FMF / Mirvac Aqua / Balmain made a lot of  promises, but how many were fulfilled, delayed, or left hanging? - are they aware that the promises they make are incapable of fulfilment?  Are some promises no more than stalling tactics?
*
I propose that we draft a letter to Mr. Ripoll of the Parliamentary Inquiry suggesting that he consider recommending to Parliament that legislation be enacted to create an independent entity charged with the assessment of frozen managed funds (responsibilities/powers/etc to be discussed).*

I think trust is in short supply, and I don't think any of us really want to retain our investments in funds in which we have no confidence.

If one thinks about it, *a frozen fund really is a 'Manager's Delight'* - investors cannot get their money back and there is nearly an expectation that income will not be forthcoming.    Fund value diminishes, income dries up, but managers and facility providers have a hay day.

The frozen fund does no more than provide managers with the optimum conditions to secure their incomes - they do not have to go to the market for capital, and the capital value of does not necessarily  have to be diminished.  Even valuations might favour managers (remember, valuations might be 20% in error) - impairments seem to be at a manager's discretion.

Managers and faciility providers incomes are secure.  Another issue that might be canvassed in such a letter about the creation of the proposed entity might relate to tax - *perhaps the entity could assess whether any tax payable/paid by the fund in recent years related to REAL profit, or to 'profit' calculated on some false or fraudlent basis*.

If one looks at the Madoff affair, one will see an interesting example - investors in Madoff's enterprises paid tax on their 'returns', but the enterprises were doing no more than repaying recent investors money to past investors.  In order words, over many years, investors were at best being paid back capital and not income - however, investors paid tax on those 'payments'.

Under the applicable taxation act, 'income' has a specific meaning - if a fraud has been committed and there really was not any 'income', then perhaps there really should not have been any assessable tax to pay. 

I'd guess there's going to be (if there hasn't been already), a lot of Madoff investors seeking tax credits/refunds  as a consequence of the fraud.  I'll bet the US government won't be wanting to pay them back either, so the matters might gain prominance in the court system at some time in the future.

With respect to the FMF, I believe that from last September 2007 (of some time after), the FMF was also non-income producting and that money paid to investors really could not be regarded as 'income' (as defined by the taxation act) but rather a repayment of capital since the fund was not really making money - in fact, I believe it was losing money at that time.

Further, I believe that any tax paid for that period should not have been paid and should be credited back to the fund.

These are personal beliefs and each members should read the financial statements of the fund to determine the matter for themselves.

Thanks.


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## seamisty (20 October 2009)

I agree investors should be credited or reimbursed for bonuses paid to managed fund employees if it is proved those bonuses were calculated on over inflated performance figures or related party transactions also. I will post part of an old article from Crikey from Mar2008. Seamisty http://www.crikey.com.au/2008/03/04/mfs-does-an-alan-bond-as-fire-sale-continues/;;;
On a proportional basis, the sale of GIPL back to Gersh represented even worse value to MFS shareholders than the disposal of Stella, which was sold for around one billion less than MFS paid to assemble the tourism business. 

The man who guided those purchases was recently terminated MFS CEO, Michael King. In what must have been MFS’s “pay for underperformance” bonus scheme, King last year received a cash bonus of more than $2 million (as well as base salary of $800,000). Unlike other MFS executives like CFO David Anderson and Investment Banking boss, Luke Gannon (who received almost 70% of their remuneration in worthless MFS scrip), King wisely chose to accept only cash. Sadly for MFS shareholders, that appeared to be the only wise move the polo-playing former lawyer seemed to make.

If and when MFS is placed in liquidation, creditors will no doubt be imploring legal action against King to recover the bonus payments in a similar manner to those of infamous One.Tel founders, Jodee Rich and Brad Keeling, who had their $7.5 million bonuses clawed back after One.Tel slid into oblivion


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## mellifuous (20 October 2009)

The proposed statutory entity and unit value.

I've made postings that if presented with a low unit price offer that I'd refuse it in order to stay in the fund to take advantage of any future increase in unit price. 

I've also stated that I believe that the needy amongst us would grab such offers with both hands simply because they need the money.  I believe these folk would obviously lose out on any future fund increases.

It was only during a conversation yesterday that I realised what I had posted on my site some time before, and this is, WE ALL LOSE.

Yes, those who take the money lose, but so do the ones who stay - the ones who stay on are compelled by the very mechanism that many would say got us into this position in the first place - greed.  We will be compelled to stay in the fund for a perceived benefit.

And what is the 'switch' for the ones who stay? It's the fund value based on valuations.  I'm sure we're all aware by now that valuations could be up to 20% in error, so we've making a decision based on a potentially erroneous proposition.  Valuing is not a science: valuations produce estimates, not precise values.

It  seems to me that valuations would be used as the 'switch' to determine whether one stays in the fund or not - that is,  we turn one way or the other based on an estimate. If we look to the past, are any of us able to say that we have any degrees of confidence in past estimates relating to fund asset?

The accruals accounting system coupled with asset valuations leaves margins of errors that I believe make decisions about future investment in the fund no more than guesswork for investors.  I believe we will not be privy to all of the financial details and would be severely disadvantaged.

Where is the fairness in an offer a 'fair value' unit price (that is, a price calcuated by the Net Value of the Fund/Number of units) rather than a $1 unit price?  

Where is the fairness for the needy who leave the fund and take the low offer?  I believe there is none.

Where is the fairness for the one who is able to afford to stay and does so based on a perceived benefit?   I believe there is none.

The only fair propostion is to maintain a full value ($1) unit price and make pro-rata payments at that value from time to time.   Example if there is the potential to pay 5% of the fund, then each unit holders would be paid 5% of their holdings directly to their accounts without the need to accept/reject an offer - a holding of 1000 units ($5000 at $1) would receive $500.

There is no need to make an offer, there is a need to make a payment, and there is aneed to maintain equity for everyone within the fund - without fear or favor.

In this way, ALL unit holders would retain an equal amount of equity within the fund REGARDLESS of the funds value and would retain the ability to make decisions about the fund's future from time to time as more proper assessments would be able to be made.

I think we should keep in mind that managers have two self-intersted goals, (1) income, and (2) the long term continuation of that income.

A low offer is an offer than many will deem too low to accept, and as a consequence they will unwittingly remain in a fund that they would otherwise abandon had they the 'free' choice to do so.

While a low offer certainly does reduce the funds under management ("FUM")  (and thereby reduce the manager's income which is calculated as a percentage of FUM), that same low offer will cause members to stay in fund and thereby enhance the manager's long term continaution of its fees.

An example is the MFS (Oct/PIF), the offers are so low that only a few have sold, every one hangs in their for an improvement - and who is the winners? the manager and the facility provides (oh! and the developers).

For us, our funds are frozen in time, but for managers and facility providers these frozen funds represent cash cows capable of being milked for years.
*
I would submit that in the event a fund is frozen, and in the event it has not been determined to wind that fund up, that its unit price should be pegged at $1/unit (regardless of the unit's 'fair value'). *In this way all investors in that fund would be treated equally.

Of course, if a fund is to be wound up, then the unit price is irrelevant.
*I further propose that managed funds should be prohibited from being listed in the event they are frozen.*

Again, my own opinion.


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## mellifuous (20 October 2009)

sorry for the error about the rate of payment to a unit holder  in my previous posting.

An offer of  $250 (5% of the original example) could be made in either of two ways:-

(1) a payment to all of 5%  of original holding (250 units at $1.00/unit) is $250

(2) if the unit price is reduced to say $.50c, then 5000 units = $2500
then an offer of $250 (5% of the original), would require 10% or 500 units.

Clearly, any member who takes the offer leaves the fund with 5% of his/her original investment at a cost of 10% of that investment.  If example (1) was adopted then all members would retain their original pro-rata equity in the fund.

Under option (2) most will remain in the fund in the hope of improvement. 

Does anyone think that those who stay in would accept only $.50 if they stay in for yet another 6 months? or 12 months? probably not, so the game just goes on and on.

Unless members have precise knowledge of the market and the state of the fund, how could they make a decision to know they would be better or worse off than those who took the offer?

In my own opinion, I have not seen a fund manager yet who have given adequate information to members in order than members are really capable of making an informed decision.

I think the worst offer you can get is one that you can't accept..

Thanks.


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## k.smith (20 October 2009)

The fundamental of a managed investment fund is an investment in which all unitholders are treated equally.

When the fund is frozen, this fundamental should be sustained - no unitholder should be disadvantaged.

The law is wrong because when offers are made it forces the needier unitholders who take their money to take the brunt of the loss, and this is contrary to the fundamental of the PDS under which we all invested.The needier unitholders who take the offer are immediately disadvantaged, and unitholders  who stay then fall into a different category...of either success or further failure..!!
http://www.balmaintrilogy.com.au/pdf/BRW_Aug20.pdf "..Griffin is confident the fund will have a future.....and with proper management there is every chance the fund can even reopen.." So there is a prospect of success, which the needier will lose out on if they are presented with an offer, while the more  fortunate can "be strong again"... 

Offers should not be made, managers should be compelled to pay pro-rata redemptions based on a fixed percentage of units the investor has.


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## Mary Lynch (21 October 2009)

Hello all,   I appreciate enormously the amount of work  that you have put into your research Mellifluous and Seamisty (yet again) and others. Thank you all, from the bottom of my heart.

Mounting a class action was difficult for the MFS action group, as apart from other obstacles, like the infernal, incestuous group of fatcats around JH, it was hard work obtaining the unitholder register.  However, you have the CP register, so we are well ahead in the job of getting support from unitholders.

So, does the register have email addresses? Can we round up unitholders, and put them in touch with this site? Then we can detect the talent....barristers/ collective knowhow etc that there is available out there....or have you already done that.

Forward movment from here I hope! Less talk, more action!


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## mellifuous (21 October 2009)

k.smith said:


> The fundamental of a managed investment fund is an investment in which all unitholders are treated equally.
> 
> When the fund is frozen, this fundamental should be sustained - no unitholder should be disadvantaged.
> 
> ...




That makes sense - what is the point of an offer when it could be that no one is the winner?  The needy run, and they greedy stay - managers promise but seldom deliver.

The concept of the 'offer' is flawed.  Perhaps the government simply did not invisage that so many prominent managed funds would fail while even a larger percentage would become frozen.

What is the point of reducing the unit price if it does no more than cause the needy to feel they have to take less while forcing  the greedy (I'm one of them) to stay in with the hope of recouping losses?

Fixing the unit price at the constitutionally determined price at the time of freezing the fund is fair and equatable to all.  In this way the needy are not advantaged and the greedy don't have to retain funds that could otherwise be withdrawn without fear of loss.

*I propose that the concept of 'offer' be erasef from the Corporatons Act, and be replaced with compulsory redemptions paid by the manager of frozen funds as soon as some predetermined level of surplus cash appears in the fund, say every 2% - each member should be paid a fixed percentage on a pro rata basis - that is, for example, each member be paid 2% of their holdings.*

It's easy to see here that this woud effectively cause members to begin winding down the fund - now, managers would not be happy with this because it's not in their best interests.  So, they would say, the offer is good, and 'fair value' is fair, and they would be right, but only for them, not for the needy and the greedy.

The the example of the MFS, a few left early, but have they done that much worse than the one's that stayed? Probably not.

Unless managers are capable of proving on some real factual basis that the fund will grow to return to liquidity, then the funds should necessarily be wound down by mandatory redemption payments (as proposed) while the funds are frozen.   

Many funds like MFS and FMF have suffered extraordinary losses which will not be recouped, and to think that these funds could ever become a shadow of their previous selves is a pipe dream.

Accurals accounting, lack of disclosure, and self-interest by managers will always cause investors to be disadvantaged.     

There can never be any payment unless there is cash in the fund anyway.  This is real problem, investors want their money back - so, while there is a demand on the return of capital and the fund cannot return that capital, then a frozen fund will remain illiquid.  It requires the majority of members to agree to stay in the fund to enable the fund to gain liquidity - there is no other mechanism that is fair to investors.

Some time ago I tried to get up constitutional amendments and as a 'quid-pro-quo' condition  to offset draconian conditions imposed on the manager, I proposed that members retain their investments in the fund for a set period of time, with an ability to draw down funds over set period of  time.  Without this mechanism, the fund will remain illiquid while there is a demand by members for the return of their capital.

A 'fair value' unit price is a croc and should be smashed from existence, it is the  mechanism a manager uses to compel those who believe 'the future to be strong' spiel (per. M. Griffin/BRW bull), and to negate the desire by members for the return of their capital.   MFS investors were put in a similar position and now find themselves trapped in la la land  - I wonder if they'd make the same choices now that some water has gone under the bridge?

If a manager really thinks that the 'fund will be strong again'', then that manager should call a meeting, give members *A COMPREHENSIVE REPORT *on the state of the fund, put forward *A DETAILED STATEGY*,  and seek members' support - otherwise, leave the unit price at the constitutionally determined price at the time the fund was frozen and progress to wind up the fund.

*Members should never allow their units to be valued at what is called 'fair value', it's a croc, and you'll be the loser - you'll never be able to make a decision without all the information - don't ever give up a right you will never get back.*

ThERE IS NO NEED TO LIVE IN FAIRY LAND AND BE SPRINKLED WITH MOON DUST - SOONER OR LATER, REALITY WILL BITE.


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## seamisty (21 October 2009)

I also personally believe that staff/employees, authorised representatives, national business development managers etc of managed funds need to have intensive training courses to qualify them for these positions of responsibility. Every PIF investor who I know that dealt on a personal level with these 'sales persons' are totally disgusted that they gave their trust to someone who blatantly lied to them, as in the fact that PIF assets and I quote from Donna Meadows, the MFS National Business Development manager on the 18th Mar 2008 after our distributions had ceased, 'The assets In PIF are held by the custodian Perpetual Nominees Ltd for the investors, not MFS Ltd.'
Investors were totally convinced and reassured by former MFS/OCV staff that the PIF assets were untouchable which was in fact, incorrect. We also did not receive a new updated PDS when we re invested funds. Should  these same highly qualified people that convinced thousands of innocent unsophisticated investors to invest in a so called bullet proof product not be held accountable in some way? Should there not be a mechanism in place to hold these people accountable for false information? Should these same people be allowed to move on to other companies/funds and remain employed in the same/similar positions? Seamisty


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## mellifuous (21 October 2009)

As soon as a manager changes the value of a unit to 'fair value', or makes an offer, the hopeful are hooked and the needy are dumped.  The manager is able to cotinue to 'reel in' the money.

Make no mistake about it, no manager wants to pay you out at $1.00 because its not in the manager's best interests - it's in your best interests.


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## k.smith (21 October 2009)

http://www.smh.com.au/business/government-moves-to-protect-mis-investors-20091021-h7rc.html

Government moves to protect MIS investors

"....The Federal Government is taking steps to protect investors who might be unfairly affected by the collapse of forestry managed investment schemes.

Presently, an investor has to invest in such a scheme for four years to retain their full entitlement for taxation relief.

The collapse of the Timbercorp and Great Southern schemes was expected to lead to a number of other schemes being wound-up or restructured, Assistant Treasurer Nick Sherry said.

As a result, investors might fall shot of the four-year requirement for an up-front tax deduction.

"The Government doesn't consider that to be a desirable outcome," Senator Sherry said, adding it unduly penalised investors for events outside their control......"

...this article should add to our enthusiasm to participate on this thread because it shows that the government is seeking "desirable outcomes"...if an outcome is in  our best interests (as voters) then its probably in the governments best interests....


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## mellifuous (21 October 2009)

k.smith said:


> http://www.smh.com.au/business/government-moves-to-protect-mis-investors-20091021-h7rc.html
> 
> Government moves to protect MIS investors
> 
> ...




*"... "The Government doesn't consider that to be a desirable outcome," Senator Sherry said, adding it unduly penalised investors for events outside their control.

The four-year holding rule was introduced in 2007 as part of a package to regulate secondary trading of forestry interests.*

Senator Sherry said many of the investments in question were made before the holding requirement was put in place.

"At the time they decided to invest, these investors had no way of knowing that their deductions were at risk," he said.

*An amended tax law will allow an investor's deduction to stand where the four-year holding rule failed due to events beyond the control of the investor*. ..."  (emphasis added)

Yes, this is the case - laws relating to managed funds may not have invisaged the fallout that we've experienced.  Don't take it for granted that the government intended that we should languish in frozen funds for years and years.

How is it realistic that laws purporting to treat members of a managed fund on an equal footing (Corp Act - that all members of a fund should be treated equally) allow needy members to be forced out of the fund through economic necessity (Corp act relating to illiquid funds allowing the manager to make offers - of, manager changing the consitutional interpretation of the value of a unit) ? That is not treating those people fairly - therein lies an argument not to support a change from the unit price form $1.00 to 'fair value'.

Even if every investor remained 'hooked' (hopeful) in a fund,  how are those same laws fair when the same potential to make an offer persists while a fund is illiquid?   While the fund is illiquid the manager is obliged to make offers, and the value contained in each offer could be more of less than previous offers and will depend on the value calculated as 'fair value'.

I would press the point, that when managers are forced to value units as constitutionally determined at the moment a respective fund is frozen, and when each manager is further obligated to make repayments of a set proporation of each investor's capital on a pro rata basis, then the onus falls upon the managers to make smart decisions and justify to members why the fund should continue.

If there is no  offer, and there is no reduction in value, then there is no need for the needy to take losses and there is no need for others to be hopeful.

It's worth nothing this letter relating to a redemption letter from Mirvac Aqua (Balmain is a JV partner in these funds) to its unit holders:-

http://http://www.mirvacaqua.com.au/downloads/20091001_september_quarter_redemption.pdf

and here is the *'hook'*:-

"... It is important to note that in the event that any monies accounted for in the loss provisions announced to date can be recovered, the proportion of your investment redeemed from your Fund would not receive the recovered sum. Similarly, redemption would reduce exposure to any future potential losses.  ..."

It might be worth mentioning also that their funds were frozen at the end of June 2008 but have been delaying the release of a purported strategy for over 5 months to date.  It's a good read to read the documents and see references to 'Going Forward', like as stated in documents referenced immediately below:-

"... 
Going forward
The Manager, Mirvac AQUA, is completing a review of the Mirvac AQUA Income Funds from a structural viewpoint and will be writing to Unitholders shortly regarding its proposed strategy for the Funds ..."


http://http://www.mirvacaqua.com.au/

The world of the managed fund is full of reviews and strategys that don't seem to materialise.  All investors seem to live on is hope.  Well, hope doesn't pay the bills.

Right now, when a manager makes an offer, the manager has no onus to prove anything it states - after the offer, members just ignore the offer and live in hope, or alternatively take their money and run.

Take a look at a case where an entity promises that if I buy an item for $100, then I will be able to sell it for $120. If  I buy the item and get only $110, then that entity will have to pay me $10 to compensate me for its misrepresentation (or however you might like to see it).

How about the manager of a managed fund when he says 'the fund will be strong' ? - what if it isn't? What is the manager's liability? There just might be a lof of liability - so, one should ask Mr. Griffin, 'just how strong will the fund be?' .. let's settle on a figure that we can rely on.

Any comments?

The real issue is that government didn't envisage the fallout we're suffering. I believe  the government will respond to reasonable requests to solve the problems we're facing today.


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## doctorj (22 October 2009)

Don’t we already have a thread for this mellifluous?

Colour me sceptical.  I know losing money is never much fun.  Anyone who’s invested will have lost at some stage and I doubt any have enjoyed the experience.  But come on!  Drawing cartoons and claiming to champion the cause of the needy!  I’m blown away.

The sad reality is that investments don’t only go up.  From time to time, they go down and people lose.  All the complaints you’ve raised (e.g. loss of liquidity, valuation methodology, disclosure requirements, fund mandate and manager remuneration) were well documented right from the start and should have been part of your decision making process before paying in the money.


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## mellifuous (22 October 2009)

doctorj said:


> Don’t we already have a thread for this mellifluous?
> 
> Colour me sceptical.  I know losing money is never much fun.  Anyone who’s invested will have lost at some stage and I doubt any have enjoyed the experience.  But come on!  Drawing cartoons and claiming to champion the cause of the needy!  I’m blown away.
> 
> The sad reality is that investments don’t only go up.  From time to time, they go down and people lose.  All the complaints you’ve raised (e.g. loss of liquidity, valuation methodology, disclosure requirements, fund mandate and manager remuneration) were well documented right from the start and should have been part of your decision making process before paying in the money.




Well, no we don't.  We have a thread for FMF .. and there is one for MFS .. but this is an attempt to get members from both groups to come together -- seamisty is from MFS  .. to try to get some consodliated effort between the two funds, and hopefully more, to make a submission to goverment/media.. etc...

If you're going to can this thread - which has had a good look-in, then if you push it into FMF that would okay for me, but not for the MFS side.

As usual, you're the boss.. let's see in the morning where we're put.

thanks.


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## zixo (22 October 2009)

I think this is a brilliant idea. I've been looking for a thread which actually has an amalgamation of all the affected funds.

MAKING Money may be fun if you're an individual investor who doesnt mind profiting from other peoples losses.
But, when you put all your savings and trust into researched "professional" and "respected" financial firms who blatantly do the wrong thing. There is absolutly No avenue both politically or legally to get any justice. 

Try looking... Its just not out there.

I guess some people just don't get that it, maybe they REALLY need to lose everything before they can see any sense.


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## seamisty (22 October 2009)

Good Morning!! I am 'encouraged' by the following media article, it appears ASIC is finally getting serious and hopefully former MFS directors will be under just as much scrutiny. Cheers, Seamisty::::http://www.watoday.com.au/breaking-...pursue-eight-centro-bosses-20091022-h9a9.html
ASIC to pursue eight Centro bosses
October 22, 2009 - 2:49AM 
Eight senior figures in shopping centre management company Centro could be banned from Australian boardrooms for their alleged roles in understating the company's debts.

Fairfax newspapers report the eight directors and executives faced action from the Australian Securities and Investments Commission (ASIC) for allegedly signing off on the company's accounts, which understated its short-term debt by $2 billion in the second half of 2007.

The company admitted it was in financial trouble because of a global freeze in world credit.

Centro Properties' shares crashed from a 2007 high of $5 to just 5c in 2007.

The accounts were corrected several months after the breach but ASIC believes the eight knew, or should have known, the accounts were inaccurate when they signed them.

Word of ASIC's push in the Centro case has given rise to speculation could take similar action against the directors of other major companies that failed or got into trouble during the financial crisis.

At least three of the eight Centro bosses named by ASIC are expected to fight the allegations, Fairfax said.


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## mellifuous (22 October 2009)

zixo said:


> I think this is a brilliant idea. I've been looking for a thread which actually has an amalgamation of all the affected funds.
> 
> MAKING Money may be fun if you're an individual investor who doesnt mind profiting from other peoples losses.
> But, when you put all your savings and trust into researched "professional" and "respected" financial firms who blatantly do the wrong thing. There is absolutly No avenue both politically or legally to get any justice.
> ...




Thanks zixo, that's what we think too.  I'd like to think this thread has two goals, (1) sorting out the mess investors in  illuqid/frozen listed or unlisted funds find themselves in, and (2) making representations about how to better protect investors in managed funds in  general.

I think people feel the frustration, but either they don't know how to go about solving the problem, or for they won't particiapate (or one reason or another).



seamisty said:


> Good Morning!! I am 'encouraged' by the following media article, it appears ASIC is finally getting serious and hopefully former MFS directors will be under just as much scrutiny. Cheers, Seamisty::::http://www.watoday.com.au/breaking-...pursue-eight-centro-bosses-20091022-h9a9.html
> short-term debt by $2 billion in the second half of 2007.




Yes, you're right - this article is what could be described as 'the green shoots of hope' for unit holders in fund damaged by other than the GFC.

We should remain hopeful that the boards of our respective present and past managers will come under ASIC's scrutiny. 

Don't hold you breath though.


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## k.smith (22 October 2009)

doctorj said:


> The sad reality is that investments don’t only go up.  From time to time, they go down and people lose.  All the complaints you’ve raised (e.g. loss of liquidity, valuation methodology, disclosure requirements, fund mandate and manager remuneration) were well documented right from the start and should have been part of your decision making process before paying in the money.




http://www.theage.com.au/business/what-happens-when-punters-are-taken-for-mugs-20091021-h96e.html

".....Furthermore, like other brokers, the analysts then started asking questions about the make-up of the current and non-current liabilities.

At the time, the annual report stated the current debts were $1.75 billion while the non-current, longer-term debts amounted to $2.84 billion.

In the same report, Mr Scott stated that its ''co-investment business model provides a resilient basis for the group to continue to operate, grow and drive investor returns''.

Unfortunately for investors no one, except the architect of the ''co-invested cemented'' model - Mr Scott - understood what that all meant.

Certainly he had professional property trusts analysts baffled, not to mention the many thousands of small investors who ploughed their hard-earned cash into the vehicle.

And, why wouldn't they have? According to Mr Scott, his model would see the group become the world's biggest shopping centre owner, eclipsing the Lowy family's Westfield group. A Centro share was worth at least $10, he told shareholders at that year's annual meeting........."

While we investors may very well complain about the obvious issues like the trustee, the rating agencies, the bank debt.....seems to me that unravelling the funds is very "baffling" even for the so-called experts....


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## k.smith (22 October 2009)

http://www.abc.net.au/rural/tas/content/2009/07/s2622644.htm

MIS lawyer points the finger at Corporations Act
By Will Ockenden

Friday, 10/07/2009

One of the lawyers involved in the collapse of managed investment company Timbercorp says there are serious problems with how MIS is regulated by the Corporation's Act.

Timbercorp went into liquidation at the end of last month, owning millions of dollars to creditors and investors.

Leon Zwier, a lawyer for the liquidators KordaMentha, says the Act needs to be clearly defined so growers, landowners, creditors and liquidators know where they stand.

"My view is that managed investment scheme provisions of the corporation's act were developed in circumstances where no one turned their mind to the insurmountable difficulties in winding them up," he says.

"I believe Government has an obligation to urgently look at the issue and to urgently move for corporate law reform."

Minister for Corporate Law Chris Bowen was unavailable for comment, but a spokesman says the MIS provisions are currently under review in a joint parliamentary committee and the Minister looks forward to examining the final report......."

".....another important issue to go on our list of items that need government attention.."


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## mellifuous (23 October 2009)

k.smith said:


> http://www.abc.net.au/rural/tas/content/2009/07/s2622644.htm
> 
> MIS lawyer points the finger at Corporations Act
> By Will Ockenden
> ...




Well, there you  go, it's not just mumbling morons like me who see the simple reality.

"... Minister for Corporate Law Chris Bowen was unavailable for comment, but a spokesman says the MIS provisions are currently under review in a joint parliamentary committee and the Minister looks forward to examining the final report ... "

and every good reason for us to get a letter together within the next week of so and go ahead and get as much support as possible (regardless of the number).

Copies to Mr. Bowen, Mr. Ripoll, Mr. Rudd, and Mr. Swan (I'm not so confident abou't the opposition, they just seem to get confused (and I'm not a labour supporter)).

It really is refreshing to see documents like the one posted here by Mr. Smith

Sometimes it's difficult to maintain dedication to research and learning, and to keep going in the face of lack of support, so, I say 'thanks'.

I think the world is never changed by the many, but rather by the few.


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## seamisty (24 October 2009)

The following is an article from the SMH. It is all very well to say we need simpler versions of PDS etc, but that still does not protect investors from manipulation and misappropriation of funds,  lack of compliance and  dodgy audits. In my opinion, in the case of MFS/OCV, it collapsed because all of this criteria was not conducted as was meant. So for simple or complex schemes, it is not what is written down that will make a fund succesfull, it is how these rules will be  regulated and monitored that will make a difference. Sophisticated or unsophisticated investors currently have no protection when it is proved directors have been negligent, (as in other funds and schemes)and I do not think the solution is to be told 'thats what you get for being greedy and going for high returns'!! If nothing else, at least these problems are under closer scrutiny. (I'd prefer to be 'left at sea')Seamisty

When the small print leaves us all at seaANNETTE SAMPSON
October 24, 2009 

There's a saying that if you don't understand something, you shouldn't invest in it. But Australia is a prime market for complex investments, many of them promising something more than the dull old ''plain vanilla'' investment products.

The focus of the regulators has always been on disclosure. So long as investors are informed of the risks, the argument goes, they should be grown-up enough to make their own decisions.

But the growing stream of casualties from the global financial crisis - and what preceded it - has prompted an increasing recognition that disclosure isn't working, especially not when it is buried in 90-page disclosure documents that deter all but the hardiest of researchers.

Debentures, CDOs, so-called income funds, hedge funds and structured offerings are just some of the products that have run into problems, leading investors to proclaim that they were not told of the risks involved.

In some cases, such as many hedge funds, the products were opaque and investors genuinely had no idea where or how their money was being invested. In other cases, risks were understated or buried in layers of promises and complexity.

Cleaning up the mess afterwards is good for the lawyers, but the question that needs to be asked is whether regulators are doing enough to prevent problems from happening in the first place.

The Australian Securities and Investments Commission is surveying complex investments to determine where more investor protection is needed and how to deliver it.

Two schools of thought are emerging.

The first is that we should be focusing on simpler and more effective disclosure. Ditch those 90-page documents put together by teams of lawyers and tell investors in plain English what they need to know.

The Federal Government has a working group developing simplified disclosure, and its proposed changes to margin lending, for example, include a maximum four-page disclosure statement (plus covers and guff) summarising all the key information clients need.

Instead of relying on product providers to decide what information is disclosed and how, the proposed statement has required headings, with information included under each one. So you would be guaranteed of being told what margin calls are and when they can be triggered, the risks of losing money (including information such as whether the lender can reduce the loan to valuation ratio or remove a security from its approved list, thus resulting in a margin call) and the costs involved.

On a wider scale, ASIC has announced an awareness campaign classifying investments that are inside and outside ''the flags'' in terms of the risks they involve. Plain vanilla investments such as bank deposits, blue chip shares and super funds would be regarded as lower risk or ''between the flags'' while more complex investments would be classified as being ''outside the flags'' and to be approached with caution.

It's not a perfect solution - and runs the risk of the regulator getting it wrong or being seen to recommend certain investment products - but it's a big improvement on the old ''caveat emptor'' approach.

A similar idea has been canvassed in the second issues paper of the Cooper review into superannuation, which raises the possibility that super funds with high fees - say, 20 per cent above the median fee level - be required to display a red traffic light on their disclosure documents, while all other funds could display a green light. The review also asks whether super funds should be required to simplify and standardise their fees to allow for easier comparisons.

If nothing else, the traffic lights system would be one way of pressuring high-cost funds to bring their fees down in line with what the bulk of the industry is charging.

But some are arguing that all the disclosure in the world won't protect investors from being sold inappropriate products. Maybe there are some products that shouldn't be offered to retail clients, or not in their current form.

If this sounds a bit extreme, bear in mind that one fast growing segment of the Australian market, contracts for difference, which are a highly leveraged way of betting on market movements - are banned from sale to retail investors in the US. Several jurisdictions have restrictions on products such as margin lending and some managed investments.

Indeed many overseas experts are surprised when they see the sophisticated products being promoted to investors with as little as $1000 in the Australian market. Hedge funds and complex debt products are a prime example.

Much attention has been given to a recent speech by the ASIC chairman, Tony D'Aloisio, in which he raised the possibility of ''product suitability tests'' at the retail level. Disclosure, he said, had been proven to have its limits, and relied on investors having the tools to understand what it meant.

Even at the institutional level, he said, the financial crisis had shown that despite widespread disclosure on products like CDOs, investors didn't appreciate the risks involved.

Banning products is seen by the investment industry as extreme. And perhaps it is. But is wasn't the simple investment products that failed during the financial crisis.

Many of the failures were characterised by traits such as opaque structures, a lack of clarity on where money would be invested, financial engineering, and complex investment arrangements. Like most sophisticated offerings, these products were marketed as being smarter and better than the bog standard offers. And perhaps some are.

But as with any other product, you need to understand exactly what you're buying. If the industry can't smarten up its act and develop products that meet this criteria, tougher measures may well be needed.


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## k.smith (24 October 2009)

seamisty said:


> The following is an article from the SMH. It is all very well to say we need simpler versions of PDS etc, but that still does not protect investors from manipulation and misappropriation of funds,  lack of compliance and  dodgy audits. In my opinion, in the case of MFS/OCV, it collapsed because all of this criteria was not conducted as was meant. So for simple or complex schemes, it is not what is written down that will make a fund succesfull, it is how these rules will be  regulated and monitored that will make a difference. Sophisticated or unsophisticated investors currently have no protection when it is proved directors have been negligent, (as in other funds and schemes)and I do not think the solution is to be told 'thats what you get for being greedy and going for high returns'!! If nothing else, at least these problems are under closer scrutiny. (I'd prefer to be 'left at sea')Seamisty.."
> http://www.brisbanetimes.com.au/bus...print-leaves-us-all-at-sea-20091023-hdb5.html
> 
> 
> ...


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## seamisty (24 October 2009)

]k.smith I have a pile of scrap paper which I scribble notes and research on. I am currently scribbling on a reply from Nick Sherry after I sent him a letter of complaint regarding the PIF in Feb this year. He responded in May this year, also on behalf of one I also sent to the treasurer In Feb 2009. Mr Sherry states he is sorry to hear of the problems I was experiencing re the PIF and said he had brought these issues to the attention of ASIC and suggested I do the same. Sorry Mr Sherry, ASIC was well and truly aware of these issues from a year previous and it was due to lack of action that investors had contacted you in desperation and frustration!! He also advised me I had the option of taking private legal action against those parties I considered to have breached the law in relation to their responsibilities as directors of the PIF RE. Well does he think 10,400 individual PIF investors have a spare $500,000 lying idle to do this? Because I know that was the conservative quote from at least 2 lawyers to look into the case on behalf of personel investors, hence the organisation of the class action. Mr Sherry then waffled on about stimulus packages, centrelink benefits and tax bonuses which had no relevance to me and my initial complaint and ended by saying 'protecting investors against losses on such investments does not appear to be a appropiate role for govt as it is likely to significantly distort the allocation of risk and return which is essential to the proper  functioning of investment markets', and trusted this information was of assistance!!!! No Mr Sherry, I trust no one and the information was of no assistance to me, that is why your pathetic, fob off reply is in the scrap heap. I have also read similar replies to other investors who contacted Mr Sherry. I hope the parliamentary inquiry is not a useless exercise as many people have spent considerable time and effort in a last ditch effort to be recognised and helped, having received no constructive help to date from one single entity, govt or otherwise. Seamisty


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## mellifuous (25 October 2009)

seamisty said:


> Many of the failures were characterised by traits such as opaque structures, a lack of clarity on where money would be invested, financial engineering, and complex investment arrangements.




"Amen"

I just wonder how much of our losses related to the 'sophisticated' nature of the managed funds, but rather to the 'traits' in the above excerpt from Seamisty?

Does 'sophistication' really have anything to do with our losses?  Do you we have to fully understand an operation to trust a surgeon? or a dentist? 

*I say that it's got nothing to whether a fund is 'sophisticated' or not, it's all to do with the integrity and professionalism of the manager.*  It's too easy to poke a stick at 'sophistication', but I'd say that would be poking a stick into thin air - ASIC should be poking a really BIG stick at directors of managing companies to make the directors understand that there are *real *consequences for wrongdoings.



seamisty said:


> Like most *sophisticated *offerings, these products were marketed as being smarter and better than the bog standard offers. And perhaps some are.




http://www.merriam-webster.com/dictionary/sophisticated

'sophisticated' = "... 
Main Entry: so·phis·ti·cat·ed
Pronunciation: \-tə-ˌkā-təd\
Function: adjective
Etymology: Medieval Latin sophisticatus
Date: 1601

1 : deprived of native or original simplicity: as a : highly complicated or developed : complex <sophisticated electronic devices> b : having a refined knowledge of the ways of the world cultivated especially through wide experience <a sophisticated lady>
2 : devoid of grossness: as a : finely experienced and aware <a sophisticated columnist> b : intellectually appealing <a sophisticated novel>

”” so·phis·ti·cat·ed·ly adverb
synonyms sophisticated, worldly-wise, blasÃ© mean experienced in the ways of the world. sophisticated often implies refinement, urbanity, cleverness, and cultivation <guests at her salon were usually rich and sophisticated>. worldly-wise suggests a close and practical knowledge of the affairs and manners of society and an inclination toward materialism <a worldly-wise woman with a philosophy of personal independence>. blasÃ© implies a lack of responsiveness to common joys as a result of a real or affected surfeit of experience and cultivation <blasÃ© travelers who claimed to have been everywhere>. ..."


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## seamisty (25 October 2009)

Thanks for the English lesson mellifuous! Something else to read and ask yourself will you ever again bother to waste time reading recommendations from rating firms and agencies when the information provided comes straight from the 'horses mouth' and in several cases has proved to be not worth the paper it was written on? Seamisty

http://www.theaustralian.news.com.au/business/story/0,28124,26246682-36418,00.html  Tim Blue | October 23, 2009 
Article from:  The Australian 
RESEARCH houses and ratings agencies must rely on the supervisory activities of regulators such as the Australian Securities and Investments Commission to determine whether there has been any fraudulent activity in a corporate entity, the head of one of the world's biggest investment research firms, Morningstar, says.

Joe Mansueto, chairman, chief executive and majority shareholder of the firm that he founded 25 years ago, said: "We are not regulators here. If someone is giving us fraudulent information it is sometimes extremely hard for anyone to detect that. 

"It is the regulators' role to root out fraud." 

Morningstar has been criticised for awarding a four-star rating to Astarra Strategic, a reportedly high-performing hedge fund operated by Astarra Managed Funds, now subject to an investigation by ASIC. 

ASIC has ordered Astarra Managed Funds -- an Albury-based group with more than $1billion under management -- to remove its product disclosure statements from its website. 

ASIC has been barred by a judge from commenting on the case. 

Mr Mansueto said that Morningstar provided data and analysis for about 11,000 funds in Australia. Of these some 4500 were covered by analyst research and about 7500 by quantitative analysis methods to check how they ranked in the agency's star rating system. 

"We don't know if the fund under investigation is fraudulent or not. We are making an evaluation based on the information we are getting. 

"We have allegations here. We can only base our ratings on information that we are given," he said. 

"If someone is criminal in intent and they are cooking the books and providing fraudulent information, they can fool regulators and they can fool ratings agencies. We do our best but we are only able to work with the information that we are provided." 

Worldwide, Morningstar has risen to rate about 140,000 funds since Mr Mansueto began it 25 years ago on a kitchen table in Chicago, working with half a dozen computers. 

He took the company public in 2005, and with its shares up more than 100 per cent. 

The son of a doctor, Mr Mansueto is a serial entrepreneur. His first business venture came in the late 1970s, selling soft drinks from his room at the University of Chicago. 

When a career counsellor suggested business, Mr Mansueto said: "I don't want to go into business -- it's kinda boring. 

"But I ended up going to business school and right after I graduated I came across Warren Buffett's writing, and then I got very excited about investing. It was an epiphany for me." 

With $US80,000 in start-up capital, in April 1984 Mr Mansueto jammed five tables and three IBM personal computers into his kitchen, and began to create databases on fund information. Within six months the first copy of the resulting publication, the 400-page Mutual Fund Sourcebook, was on his desk, containing everything an investor needed to know about every fund on the market. 

Today Morningstar has revenues of more than $US500m ($541m), to be "far and away my best investment", says Mr Mansueto, who is worth around $US1.3bn. But he still invests personally, with a portfolio of fewer than 20 stocks. 

He is also a publisher, owning two US business magazines. 

In Australia, Morningstar publishes fund and stock research to investors, financial planners, brokers and fund managers and earlier this year bought Intech, a relatively small implemented consulting firm to add to its retail investor newsletter business, the former Aspect Huntley


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## mellifuous (25 October 2009)

seamisty said:


> Thanks for the English lesson mellifuous!




No problems - but it wasn't meant to be an English lesson - what I really mean is that once started, learning is endless - we just never know how little we really do know, until we start to learn.   

Learning about the word 'sophisticated' is in itself a arduous task, learning everything about investments would be impossible.

When ASIC really does focus on the bad guys, then the investment world will become a safer place to play in.


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## seamisty (26 October 2009)

Hi All, I invite you to add to this list of suggestions to be fowarded to Mr Rippoll for consideration ASAP. Thanks, Seamisty

1. We propose recommending to Parliament that legislation be enacted to create an independent entity charged with the assessment of frozen managed funds ..(perhaps to work in conjuction with ASIC..)


2. That the entity could assess whether any tax payable/paid by the fund in recent years related to REAL profit, or to 'profit' calculated on some false or fraudulent basis.

3.That managed funds should be prohibited from being listed in the event they are frozen.

4.That the concept of 'offer' be erased from the Corporatons Act, and be replaced with compulsory redemptions paid by the manager of frozen funds as soon as some predetermined level of surplus cash appears in the fund, say every 2% - each member should be paid a fixed percentage on a pro rata basis - that is, for example, each member be paid 2% of their holdings.

5.If a manager really thinks that the 'fund will be strong again'', then that manager should call a meeting, give members A COMPREHENSIVE REPORT on the state of the fund, put forward A DETAILED STATEGY, and seek members' support - otherwise, leave the unit price at the constitutionally determined price at the time the fund was frozen and progress to wind up the fund as opposed to depleting fund assets to cover operating costs and management fees.


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## k.smith (26 October 2009)

Hi Seamisty,

It would be in our interests to elaborate on point 1.
1. We propose recommending to Parliament that legislation be enacted to create an independent entity charged with the assessment of frozen managed funds ..(perhaps to work in conjuction with ASIC..) 
AND...which will inform unitholders by way of letters and statements a full disclosure of their current position and options.


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## seamisty (26 October 2009)

k.smith said:


> Hi Seamisty,
> 
> It would be in our interests to elaborate on point 1.
> 1. We propose recommending to Parliament that legislation be enacted to create an independent entity charged with the assessment of frozen managed funds ..(perhaps to work in conjuction with ASIC..)
> AND...which will inform unitholders by way of letters and statements a full disclosure of their current position and options.



 Agree totally k.smith. I have had a quick look at dupeds' suggestions on the OCV thread and he has made some valid points also. (thanks duped) I will post them on here as well so mellifuous can incorporate them into the finished letter. Seamisty

6. If an unlisted fund is frozen (or listed fund is suspended from trade) then all transactions AND transfers under e.g. lines of credit with related parties be banned. Or something less restrictive such each and every transaction above a very low threshold requiring an auditor sign off, or quarantined in a separate entity which is in voluntary administration. Total ban on drawing down of unsecured facilities when a fund is frozen.

7. Severe restrictions on unlisted funds undertaking related party transactions. E.g. Every related party investment by an unlisted trust requires registration of a floating charge whereby the fund's investment is automatically regarded as secured as at the date of the initial investment if:
the related party or any party related to the related party, within 6 months:enters administration or has liqidators appointed, share price drops by a certain amount, initiates divestment of major assets etc. 

8. Compulsory insurance against the action of directors, officers, compliance committee officers, etc up to the value of e.g. 25% of the funds reported value. Key details of insurance policy included in the PDS, changes to the policy to be announced to the investors AND market within 1 week, and the entire policy document available free of charge within 1 week from request in paper or electronic format. Electronic format must be text searchable.

9. Any attempts by trusts or RE's preventing or extorting investors/unit holders seeking unit holder lists, trust documents, insurance policies be severly punished. Namely, codify amounts that can be charged and penalties of 10 times the difference. (Legisalating that this must be covered by insurance policies.) Such requests to be fulfilled within 1 week. Penalty $1000 a day. In paper or electronic format. Electronic format must be text searchable.

10. Total ban on related party transactions by unlisted trusts when any director or officer or their family or associates of the related party owns shared in the related party or party related to the related party and has a loan secured by those shares.

11. Fix up the notification of variations in chapter 2K. E.g. any drawn down of a facilities of 10% of the value of facility brought about by something like a 'transaction document' is to be regarded as a change in the terms of the charge. Massive punitive measures where company anouncements conflict with the credit facility as well as some sort of automatic ASIC litigation measures in the legislation for breaches. 

12. Take punitive $$ legal action against Deloitte for failing in their duties and putting themselves in a position whereby PTQ now has an arguable case that Deloitte has a conflict of interest.

13. Any draw down of a credit facility by a fund (e.g the facility PIF had with RBS) of more than 10% of current value (audited value within the previous 3 months) be reported to the shareholders/credit holders within a week. And/or, mandatory reporting to shareholders/unit holders of new credit facilities or where existing facilities have been extended, or/and drawn down by 50% AND 75% AND 90%. Penalty - automatic administration.


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## mellifuous (26 October 2009)

seamisty said:


> Agree totally k.smith. I have had a quick look at dupeds' suggestions on the OCV thread and he has made some valid points also. (thanks duped) I will post them on here as well so mellifuous can incorporate them into the finished letter. Seamisty.




Yes, I note the issues raised by 'dupe'.

However,  I think we have to approach this matter  on at least two levels:-

1.  The situation in which we find ourselves at this time, and how to protect investors' interests in the best possible way; and,
2.   The issues relating to how we got here - eg.  related party loans, managers' self interest, mezzanine loans, etc.

Time permitting, I'd like to try to present a letter to the forum in relation to issue 1. above,  within the next two days.  

We could discuss the letter for amendment and transmission to the various addressees.  I know we all have our individual biases, so criticism is welcomed.

After the first letter is settled, then we could discuss a second letter relating to issues we feel led to our current position, and then if necessary, another letter relating to other matters that arise outside of the ambit of the first two.

Any comments about this approach?


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## seamisty (26 October 2009)

mellifuous said:


> Yes, I note the issues raised by 'dupe'.
> 
> However,  I think we have to approach this matter  on at least two levels:-
> 
> ...



Mellifuous, I appreciate the time you are prepared to put into this and will personally support any letters you propose that will further highlight our situation and could possibly help in preventing a repeat scenario. As time goes on, some investors are starting to acknowledge that our predicament is far worse than we were led to believe initially and there is in fact, little chance of ever recouping our initial investment, not to mention 'a stable income stream from a secure, stable investment'. Strategies from these self proclaimed 'gurus' are in short supply, fund managers touting their expertise appear to be suffering from a severe case of laringytis or is it simply a case of 'when the going gets tough, HIDE'????? Whatever, in the case of the PIF, it is quite obvious that WC made promises it cannot deliver but prefer to let  investors dog paddle until they eventually drown because WC are not prepared to  admit that they got wrong! In my opinion, the promises to us were made on purely the assumption that PIF would be handed millions of dollars from OCV in compensation sooner rather than later, which would give WC the opportunity to pay us 3 cents per unit, open pandoras box for management fees with a few mill$$ left over to kick start life support for the PIF. It never happened and we are being financially crippled even further with astronomical legal fees which have produced absolutely zilch to date!!!! It will be interesting to see how small the list of PIF assets are currently and how large the impairment list is, not to mention 'operating costs'. Since I do not waste my time calling the WC hotline anymore, I sincerely hope investors are not still  being read a spiel that may not eventuate. Peed off, you bet I am!!!Seamisty


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## mellifuous (27 October 2009)

"... It is fair to say that ASIC undertakes less surveillance on listed property trusts that on other managed investment schemes. There are two main reasons for this. First, the product is reasonably simple and can be described relatively easily by issuers. And, secondly, as you are aware, the product is regulated primarily by the ASX once the securities have been listed. ..."

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/property_trust_speech_180504.pdf/$file/property_trust_speech_180504.pdf

"... ASIC indicated some concerns about the contents of Product Disclosure Statements being issued by property trust issuers.1 Areas identified were:
 Use of theoretical returns and unsupported forward-looking statements
... 
 Failure to explain, as a significant feature of the product, the possible dilution of investors' interests by future transactions. ..."

Is 'the fund will be strong' an 'unsupported forward-looking statement? (FMF Issue).

"... ASIC has taken corrective disclosure action where disclosure of fees and charges in
the PDS is deficient—where, for instance, there is little or no disclosure of:
 the percentage or dollar amount of fees
 the way they are calculated, or
 how and when a fee or charge is paid.
Nor will we accept a situation where there is inadequate disclosure of a product issuer's capacity to vary fees and charges, including references to maximum permissible fees. ..."

This is interesting because when Trilogy took over the FMF, the PDS was withdrawn, so in effect, Trilogy didn't have to explain much at all.  For example on fees, Trilogy hasn't yet answered the simple question as to whether they are taking 'direct fees' (FMF issue).

There is a lot to read in this ASIC document.

Here are some graphics I did to express my view about non-liquid / listed non-liquid managed funds:-


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## mellifuous (28 October 2009)

Well, to cap it off, the issues to be dealt with in the first letters should be:-

*Non-Liquid (frozen) managed funds*

1. THE VALUE OF A UNIT

(a) [pertaining to liquid funds and non-liquid funds] In the event the unit price is determined by way of a fund's constitution, then amendment of same shall only be way of a special resolution  (75%)

(b) In any event, a manager shall not unilaterally amend the constitution of a managed fund while that fund is non-liquid or within 180 days of a fund being deemed non-liquid.

2.  THE MANAGER SHALL DISCLOSE A STRATEGY FOR THE FUND'S RECOVERY

(a) Within 14 days of deeming the fund as non-liquid, the manager has disclose a strategy for the fund's recovery.

(b) In the event the fund is deemed liquid within the period in 2. (a) then the requirement of disclosure by the manager is waived.

3.  MANAGER TO DISCLOSE DETAILS OF LOANS

(a) Within 60 days of deeming the fund non-liquid, the manager shall disclose the details of each security property attached to a loan in default or capitalized, how much is outstanding, and for how long.

(b) In the event the fund is deemed liquid within the period in 3. (a) then the requirement of disclosure by the manager is waived.

4.  MANAGER TO DISCLOSE THE DETAILS OF DEBT

(a) Within 30 days of deeming the fund non-liquid, the manager shall disclose the level of debt owed by the fund, and the status of that debt.

(b) In the event the fund is deemed liquid within the period in 4. (a) then the requirement of disclosure by the manager is waived.

5.   MANAGER TO PROPERLY ADVISE MEMBERS

(a) The manager should, within 30 days advise members of the present state of the market and the future prospects for the fund.

(b) such advice should include the likelihood of success and the evidence the manager used to make the assessments.

6. STATUTORY ADMINISTRATOR

(a) The Statutory Administrator would scrutinize the fund and the manager's strategy to make enforceable orders as to the fund's future including (but not limited to),  (a) orders to wind up a fund.

(b)  The Statutory Administrator shall make a recommendation of legal action against any entity (person or company), providing the Administrator finds _prima facie_ evidence to support such a  recommendation.

(c) However, such orders could be set aside by a  meeting of members passing a special resolution (75%).

7. TAXATION

(a)  If  a court or the proposed statutory entity decides that a manager has wrongfully disclosed a profit by inflation of the value of assets or by  any other means, then that court or proposed statutory administrator should be enabled to direct the tax office to refund any tax paid by the fund or members of that fund as a consequence of the manager's wrongfully disclosed profit. 

8. OFFERS TO BE REPEALED

(a) that all provisions in the corporations act relating to offers by managers of managed funds be repealed and replaced by the following:-

(i) A manager of a non-liquid managed fund shall make redemption payments to members of that fund at such time as the fund accumulates a surplus amount equal to 5% of F.U.M. (Funds Under Management), providing:-

(A)  All facility providers have been repaid; and,

(B)  Such payments to members be made fixed percentage of unit holdings, and on a pro-rata basis.

9.  NON-LIQUID LISTED MANAGED FUNDS

(a) If a listed managed fund remains non-liquid (frozen) for more than 60 days, then the manager must call a meeting to allow members the opportunity to pass an extraordinary resolution (50%) to de-list the fund.

10.  COMMUNICATIONS TO MEMBERS

(a)    [pertaining to non-liquid and liquid managed funds] The manager must include in the notice of any meeting, any document put to the manager, providing such document is supported by 200 members and complies with existing provisions of the corporations act pertaining to explanatory memorandum accompanying a notice.

(b)  A member has not be permitted to support more than one such document as described in 10. (a) above.


        


Of course there will be a lot of amendments to be done to the foregoing, but at least it's a start.

I'm looking forward to comments and suggestions for amendments.

Remember, this  first letter relates only to issues to help us get out of WHERE WE ARE NOW.

It will be necessarily be long and detailed, so we have to keep to the key points (IMO)

Thanks.


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## k.smith (28 October 2009)

"We have an oversight and monitoring function. We often arrive after an accident occurs."

http://www.weeklytimesnow.com.au/article/2009/10/28/127771_latest-news.html

and what about when journalists tried to stop an "accident" from happening?

http://www.theaustralian.news.com.au/story/0,25197,22318180-16942,00.html

oversight..?? monitoring...???


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## seamisty (28 October 2009)

k.smith said:


> "We have an oversight and monitoring function. We often arrive after an accident occurs."
> 
> http://www.weeklytimesnow.com.au/article/2009/10/28/127771_latest-news.html
> 
> ...



We have an oversight and monitoring function. We often arrive after an accident occurs." 


They must be on bloody crutches k.smith!!!! Its taking a long time for them to arrive!!

'But there was an onus on the industry to self regulate and report breaches of the law, he said.'


I've been writing letters of complaint to all and sundry for 19 months reporting breaches for stuff all!!!

She said 'investors could take civil action if they believed they had been deceived by an MIS product disclosure statement.'


Same words of support and wisdom from nick Sherry!!!!

All the more reason to plod along making noise and registering dissatisfaction 
with the current regulatory system!! Thanks mellifious for the time and effort you are committing to draw attention to managed fund investor concerns. Seamisty


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## mellifuous (28 October 2009)

clayton4115 said:


> - Storm Thread
> 
> "... You see, the existence of ASIC or any regulator creates more problems than it solves. It's similar to the moral hazard argument. You know the one, that's where banks take risks because they know the government will bail them out.
> 
> ...






clayton4115 said:


> ..."
> 
> Yes, the same as our experiences in managed funds, at the time we made our respective investors, we all seem to have a belief that the regulator would protect us.
> 
> ...


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## k.smith (29 October 2009)

http://www.smh.com.au/business/banks-are-riding-high-and-its-costing-all-of-us-20091028-hl3y.html
October 29, 2009 .
NATIONAL Australia Bank's swelling profit margins and ballooning market share are the best proof yet that the financial crisis has been the golden goose for the big four banks.

While NAB's headline net profit was down 43 per cent for the year, its underlying cash earnings during the worst financial crisis in 100 years fell a little under 2 per cent to $3.9 billion.

Strip the results back further and its net interest margins (NIMs) were up 18 basis points to 2.25 per cent in the second half, which was well above consensus expectations and, according to Goldman Sachs JBWere, this alone represents 10 per cent upgrades to consensus earnings.

This can mainly be attributed to the success of its Australian banking operations, which were able to lift operating profit before bad debts by 3 per cent in the second half to raise its NIM 12 basis points and market share in key areas. For instance, business lending market share jumped from 19.3 per cent to 20.1 per cent, personal lending edged up from 15.6 per cent to 15.8 per cent, retail deposits climbed from 14.8 per cent to 15.1 per cent and its NIM grew 12 basis points in the second half.

This is significant given NIMs across the banking landscape have been steadily sliding over the past decade.

Rising NIMs will no doubt be a recurring theme over the next week as ANZ and Westpac report their full-year results.

If nothing else, the figures released by NAB yesterday and ANZ today should be a wake-up call to the Federal Government to do something fast to arrest the diminishing competition in Australian banking as the big four grab bigger slices of home loans, small-business loans, credit cards and deposits.

After all, the dwindling competition is largely due to the Government's actions during the global financial crisis to shore up our financial system, which included guaranteeing deposits and offering a two-tiered guarantee to bank debt.

While the Government's actions at the time were necessary to maintain stability, the longer they remain, the more profound will be their consequences on competition.

Bank of Queensland chief executive David Liddy put it well last week when he quantified the cost of the guarantee to the bottom-line profit of the bank: $10 million in lost profit as second-tier banks pay 80 basis points more than the big four to borrow the Commonwealth's AAA credit rating.

The upshot is NAB's results were down 2 per cent for the year but they could have been a lot worse without the guarantee.

Put another way, if NAB had better risk-taking strategies, NAB's results could have been a lot better. Besides taking into account poor results in its British and New Zealand businesses, its exposure to collateralised debt obligations and its big whack of bad and doubtful debts, it also took some trading risks.

For instance, on page 86 of the annual results, in a note on income it mentions that gains less losses on financial instruments at fair value on trading derivatives rose from $254 million in 2008 to $380 million in 2009. On the face of it, this looks great, but in March 2009 this was a gain of $677 million which somehow turned into a loss of $297 million in the latest half.

This is relatively small stuff but it highlights a point that is often missed: the guarantee carries with it risks and if the banks get it wrong, taxpayers ultimately pay the price.

They are already paying the price of lessened competition and this will only get worse.

The reason is simple: banks right now are on their best behaviour in terms of feeling short-term pressures to keep fees down. But long after the guarantee has gone, consumers will feel the long-term harm from the disappearance of competitors, particularly as interest rates continue to rise.

Recent figures show that the big four banks now hold 73.8 per cent of outstanding mortgages in Australia, up from 56.8 per cent two years ago. It's a similar story on the deposits front, despite the Government guarantee of all approved deposit-taking institutions' deposits at the height of the crisis. The big four hold 72.6 per cent of all retail deposits in Australia compared with 58.8 per cent before the crisis.

The Government recently tried to tackle this by directing the Treasury's financing arm to buy up to $8 billion in mortgage bonds from small home lenders to ensure they survive against their bigger competitors. But given the housing market is worth more than $200 billion, this is more about keeping them on life support than creating any genuine competition.

If the Government was serious about competition it would join Britain and Canada by backing a new AAA-rated mortgage bond, where the underlying asset is guaranteed rather than the institution issuing the bond.

Source: The Age


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## doctorj (30 October 2009)

Not sure how this is related to the rest of this thread.


k.smith said:


> Strip the results back further and its net interest margins (NIMs) were up 18 basis points to 2.25 per cent in the second half, which was well above consensus expectations and, according to Goldman Sachs JBWere, this alone represents 10 per cent upgrades to consensus earnings.



Doesn't this make perfect sense?  Your net interest margin is essentially the spread the banks charge to cover operating expenses, some profit for the shareholders and to reflect the risk of the loan portfolio.  In fact, the journalist himself notes this change further along in the article.


> NAB's results could have been a lot better... its big whack of bad and doubtful debts...





> This is significant given NIMs across the banking landscape have been steadily sliding over the past decade.



Good economy = people more easily able to pay loans or refinance = fewer bad loans in the portfolio = lower NIM.

Journalistic sensationalism. No substance.


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## mellifuous (30 October 2009)

k.smith said:


> If the Government was serious abou...give security to investors in mortgage funds.


----------



## mellifuous (30 October 2009)

*THE RELATED PARTIES*

http://news.iguana2.com/bspectator/ASX/TMX/460638

*page 55   Grande Pacific limited holds 15.09%   17,690,815shares*






From  2008 City Pacific Limited mid report 

"... Grande Pacific Limited, a fully owned subsidiary of City Pacific, has $40,632,320 of development loans from City Pacific First Mortgage Fund. The loans are variable, interest only facilities (current rate 13.00%), have terms of 12 months, maturing in October 2008, December 2008 and January 2009 and are secured by 1st registered mortgages over property. A*s at the date of this report, the loans have not been repaid or extended, however the lender has not taken any action in relation to the loans *and discussions have commenced in relation to extension of the facilities. ..."

{all emphasis mine}

Now, one would think that 'the lender' is a very generous entity - but, when you think that City Pacific was the manager of the lender, its easy to see why.

Take a look at the loans' progression here - http://wwwmoneymagik.com/grande.php






*B/T'S RAISING THE BUCKS*

Ah! 'Pacific Beach', where B/T 'raised' $80m (for a loss of about $135m). 

http://www.theage.com.au/business/new-broom-blames-old-one-20091025-herc.html

"... The group raised $80m through the sale of a Gold Coast beachfront property ..."






and the profits were all directed to City - the risk directed to the FMF.


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## seamisty (30 October 2009)

Mellifuous this is exactly what was going on with MFS/OCV directors with our Premium Income Fund(S)!!!! Related party transactions were common practise and in some instances the loan never got repaid, it just got bigger, went on for years and was unsecured!!! I see disturbing evidence of similaraties occurring in other funds. Without intervention to protect investors of this being EVER ALLOWED TO REOCCUR, potential investors must be adequately informed that these types of investment product are not strictly regulated and extremely risky!!!! Having an 'experienced team of investment professionals who research, analyse, construct and manage the portfolio', does not mean you will NOT be robbed!!! Seamisty


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## doctorj (30 October 2009)

mellifuous said:


> It's all about resolution of the moral question - why should banks take risks, but because they're too important to fail, then be rescued if they get into trouble.




There were two guarantees issued, quite different in nature.  First was the deposit guarantee - this was to protect against the risk there would be a run on deposits causing banks to fail.  This had nothing to do with the underlying risks presented by the banks.  Even the safest, best run bank will fail if there is a run on their deposits.

The second was via an insurance of their bonds.  First thing to know is that bond insurance is quite common (for example, Warren Buffet owns a large bond insurance business).  The second is that the banks paid for this insurance and the fee was risked based (refer: http://www.rba.gov.au/PublicationsA...bilityReview/Mar2009/Html/list_of_tables.html)



mellifuous said:


> The author is suggesting that the Australian Government guarantee the underlying security and not the institution.
> 
> Maybe that's an idea that could possibly give security to investors in mortgage funds.



It could of, but if there was a risk based premium set for the insurance, then you'd be paying a whole lot of premium.  No such thing as a free lunch... For example Ukraine CDS spreads peaked at something 3000 basis points.


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## mellifuous (30 October 2009)

doctorj said:


> It could of, but if there was a risk based premium set for the insurance, then you'd be paying a whole lot of premium.  No such thing as a free lunch... For example Ukraine CDS spreads peaked at something 3000 basis points.




No one will argue with you about that, especially seeing what can be done by managed mortgage fund managers.

It's very different to a bank lending to a home 'owner' with risk and value spread across a broad number of such loans.

I don't believe it's an issue that we should take seriously at this time.


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## mellifuous (30 October 2009)

seamisty said:


> Mellifuous this is exactly what was going on with MFS/OCV directors with our Premium Income Fund(S)!!!! Related party transactions were common practise and in some instances the loan never got repaid, it just got bigger, went on for years and was unsecured!!! I see disturbing evidence of similaraties occurring in other funds. Without intervention to protect investors of this being EVER ALLOWED TO REOCCUR, potential investors must be adequately informed that these types of investment product are not strictly regulated and extremely risky!!!! Having an 'experienced team of investment professionals who research, analyse, construct and manage the portfolio', does not mean you will NOT be robbed!!! Seamisty




Actually, the posting to which you reply was meant for the FMF thread .. my mistake.. 

It seems that there is some relevance to the matter of raised by Mr. Smith and responded to by DoctorJ, and that is the issue of government guarantees for mortgages.

Oh.. I just realised that it would be problematic for home loans too.. At the time I hadn't given it much thought.

Nevertheless, related party loans and what managers have been shown to do in the past would make it a lot more expensive proposition than first thought with respect to our types of funds.

I think most of the managed funds have gone down because of related party activity and manager self interest.

Perhaps the idea of a government guarantee is a pipe dream for those who support it, especially (but not limited to) the mortgage based managed funds.


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## seamisty (30 October 2009)

I'm 'encouraged' to read articles like the following. ASIC seem to be making some noise and getting results, so hopefully it will set a precedent to act on other similar situations. Seamisty



ASIC wins $5.9m Westpoint claim against Professional Investment Services Print CITY BEAT: Michael Bennet | October 30, 2009 
Article from:  The Australian 
THE corporate watchdog has won its second battle in its war against parties related to failed Westpoint Group, after the Federal Court today approved a compensation claim that will see a group of investors get back 62.5 per cent of their investment.

The Australian Securities & Investments Commission has filed 19 civil actions totalling more than $500 million in relation to Westpoint’s failure, including a claim against auditor KPMG, after the property empire collapsed in January 2006 owing investors $390 million. 

ASIC is also pursuing former chief financial controller Graeme Rundle in relation to a 2004 bid to secure a $71 million credit facility to fund a building project in Sydney which could see the Perth-based executive imprisoned if convicted.

In a win today for investors, The Federal Court approved a $5.9 million compensation claim for a group of investors that were advised by Brisbane-based Professional Investment Services (PIS) to invest in Westpoint. 

ASIC said the payout would be distributed equally to investors based upon the total capital they had invested on December 14 at the earliest if no appeal is filed. 

The win follows the first successful action of ASIC's 19 in relation to the Westpoint failure against Masu Financial Management in November last year. 

ASIC is currently suing Perth-based Brighton Hall Securities – which is in liquidation – for damages of about $14 million in a similar case which is to return to Perth’s Federal Court on November 16


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## mellifuous (30 October 2009)

seamisty said:


> I'm 'encouraged' to read articles like the following. ASIC seem to be making some noise and getting results, so hopefully it will set a precedent to act on other similar situations. Seamisty
> 
> ASIC wins $5.9m Westpoint claim against Professional Investment Services Print CITY BEAT: Michael Bennet | October 30, 2009
> Article from:  The Australian
> ...




Yes, it's fair to give credit where credit is due - good onya ASIC .. 

But, don't rest on your laurels... go get um Fido.


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## mellifuous (1 November 2009)

I'm starting to do a bit of work on the letter.

It's located in .pdf format at http://www.moneymagik.com/managed_fund_co-operation_group.pdf

If you'd like to comment, then please contact me at:-

allan161@msn.com

I'd particularly like input from MSF members.

Criticism, suggestions, alterations, additions, and corrections are welcome.

Thanks.


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## mellifuous (1 November 2009)

mellifuous said:


> I'm starting to do a bit of work on the letter.
> 
> It's located in .pdf format at http://www.moneymagik.com/managed_fund_co-operation_group.pdf
> 
> ...




Correction # 1 ----> MFS .. sorry..


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## simgrund (1 November 2009)

mellifuous said:


> I'm starting to do a bit of work on the letter.
> 
> It's located in .pdf format at http://www.moneymagik.com/managed_fund_co-operation_group.pdf
> 
> ...




This thread is a good deed, Mellifuous. Thanks for that.
Re suggestions/submissions to the letter, I think we should submit an entirely new proposal to the Government. 
We know of a "defined benefits" schemes paying pensions and strictly protected by whatever governing legislations of the relevant government.
While most of those schemes have long been closed to new PS members, 
I dare to think that the structure of this discipline could be transposed to privately funded (pooled members) entity created *expressly for ** retirement benefits. *
There would be a set of criteria to be met for entering the membership. The decision making would be with the affiliation of Government and independent bodies. The risks of "selecting the wrong product" would be eliminated by there being only 1 specific product.
As the operation would be legislated, the risks of malpractice would not exist.
At present, not one recipient of existing government pensions had to turn to ASIC for any relief. There is no reason why such certainty could not be built into a parallel private structure. 
Of course, the benefits would not be CPI indexed and would be in accordance with the returns from "safe" investments underpinned by the government guarantees. Just as most of our banks are safeguarded today.
Once "Retirement Only" class of such a scheme is set up, it will attract many who only want returns a point or so higher than bank term deposits. 
The "annuity" and "allocated pensions' regimes would also have elements of risk reduced or eliminated altogether as the sources of the payments would be under same protective umbrella.  
Perhaps it is all a wishful thinking.  But in the very least; perhaps it could be discussed. 
Regards, simgrund

PS.  Timer on this thread is not [daylight saving] adjusted


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## mellifuous (1 November 2009)

simgrund said:


> This thread is a good deed, Mellifuous. Thanks for that.
> Re suggestions/submissions to the letter, I think we should submit an entirely new proposal to the Government.
> We know of a "defined benefits" schemes paying pensions and strictly protected by whatever governing legislations of the relevant government.
> While most of those schemes have long been closed to new PS members,
> ...




wow.. Simgrund, that's all over my head.

You're welcome to add a letter and seek support here.

If others wish to discuss the issues you raise then I have no concerns.

None of the issues you raise apply to me (as I understand them).

Thanks.


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## mellifuous (2 November 2009)

mellifuous said:


> I'm starting to do a bit of work on the letter.
> 
> It's located in .pdf format at http://www.moneymagik.com/managed_fund_co-operation_group.pdf
> 
> ...




The letter has been deleted due to lack of interest.
Thanks.


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## lightlystrung (2 November 2009)

Hi Mellifuous, 

You have unearthed some really spectacular and relevant information on CP and I would like to read your letter but cannot get the link to work?
Check it out yourself....probably my old computer.

Keep up the good work.

lightlystrung


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## simgrund (3 November 2009)

mellifuous said:


> The letter has been deleted due to lack of interest.
> Thanks.




*RE: http://www.moneymagik.com/managed_fund_co-operation_group.pdf*

No,no, Mellifuos,

This is very good work. It needs to find the right office where the "dots" and "i's" could be finalized and presented.
Lets keep it going. My suggestion of  creating a new class of "retirement only" scheme [#54] was meant to compliment your suggestions for improvements to existing regimes.
I hope I clarified this.

Best wishes, simgrund


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## k.smith (3 November 2009)

mellifuous said:


> I'm starting to do a bit of work on the letter.
> 
> It's located in .pdf format at http://www.moneymagik.com/managed_fund_co-operation_group.pdf
> 
> ...




The proposals set forth in this letter MUST go to the relevant authoritories. In the light of the developments over the last few days with ASIC taking action re MFSPIF investors, seems that the authoritories are finally taking an active interest. This makes for a very positive timeframe for unitholders to band together to effect change, so that we have more transparency, so that we have more disclosure, so that  we can contact eachother, so that we can be fully informed ..... It would be most effective if as many people as possible  add their names to this letter which will be forwarded to Mr.B.Ripoll and all members of the committee re Parliamentary Inquiry, to government ministers and to the media.


----------



## mellifuous (4 November 2009)

simgrund said:


> *RE: http://www.moneymagik.com/managed_fund_co-operation_group.pdf*
> 
> No,no, Mellifuos,
> 
> ...




Good morning simgrund

Well, mail me your suggested paragraphs and additions to:

mellifuous@dodo.com.au

and we'll see  what we can do.

Thanks.


----------



## seamisty (4 November 2009)

mellifuous said:


> Good morning simgrund
> 
> Well, mail me your suggested paragraphs and additions to:
> 
> ...



mellifuous I consider it important that you complete this valuable document. Breaker1 has included the link to this forum in his latest investor update;;;


'Support requested for a new initiative by the PIF AG and some combined City Pacific/PIF unit holders:

I would like to draw your attention to the "Managed fund co-operation group" thread on aussie stock forum:  
https://www.aussiestockforums.com/forums/showthread.php?t=17644&highlight=Managed+fund+co-operation 
as I think investors should offer support by endorsing  the efforts of anyone willing to make 'noise' if they agree with the content.

Welcome to this new thread which has been created in the hope that members of all managed funds might find ways of solving issues of common concern. 

Issues such as how to put pressure on government for a changes in applicable law in order to give (better) protection to investors in managed funds, how to pressure ASIC to look into alleged wrongdoings by fund managers, and how to gain co-operation with the media to present the plight of investors in a constructive and beneficial way.

If you feel you are able to contribute in a constructive way, then I sincerely hope you will join to express your view and co-operate to alleviate our mutual concerns.

This new thread is a joint effort by members of FMF [City Pacific] and the PIF AG at this time.'

Those wishing to contribute can contact him at breaker7@optusnet.com.au and he will foward it to k.smith who has kindly volunteered to assist you by helping to coordinate this initiative.
Thanks again for the time and effort you have committed to this, it is much appreciated. Cheers, Seamisty


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## simgrund (4 November 2009)

mellifuous said:


> Good morning simgrund
> 
> Well, mail me your suggested paragraphs and additions to:
> 
> ...




Just give me/us again the DIRECT link to the draft letter.
 I am lost in this link.*http://www.moneymagik.com/managed_fu...tion_group.pdf*
Thanks mellifuos


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## mellifuous (4 November 2009)

simgrund said:


> Just give me/us again the DIRECT link to the draft letter.




The link is:

http://moneymagik.com/letter.pdf


----------



## mellifuous (4 November 2009)

mellifuous said:


> The link is:
> 
> http://moneymagik.com/letter.pdf




Hi Simgrund,

I'm starting to get what you mean - you mean a fund into which retired persons would be able to invest with security - I'd guess at this time that's called  a bank or a building society.

I think that the days of the 'cowboys' (City, MFS, etc.) are over, or at least just about over.  I'm really hoping that ASIC will start putting its foot down, with the result that the outcomes for investors will be more certain and secure.

All these cowboy managers simply got greedy - they were totally  self-interested - and they were not kept on a tight rein by ASIC and their respective fund's auditors.

A poor manager will see a fund's capacity to obtain a facility as a way to increase the F.U.M. (funds under management) and thereby increase their fees (since fees are calculated as a percentage of FUM).

A good manager will see that same facility as a ballast against too great a drop in cash flow as a consequence of the tension between investor and borrower increase/decreases.

None of the funds that failed achieved any level of capital contingency - they lend our every cent they could get their hands on - and the facility providers let them - I'll be surprised if any of the facility providers even gave a second's thought to the consequences for investors in the funds.

They were driven to make even more profits and couldn't help themselves from entering  into nepotic relationships which placed unit holders' investments in peril - such relationships were probably the cause of the substantive part of our losses.

In the past, a great deal of trust was placed in managers by ASIC, and it's clear that ASIC's trust was misplaced - the framers of the Corporations Act must never have envisaged the situation we find ourselves in  today.

I would say what you (Sigmund) is looking for, is what we are looking for in the future if we were ever to consider investment in property trusts in particular, and in managed funds in general - we are looking for a secure place to invest our money - not a cash cow for cowboys to milk over and over again.

I'd say that until the government cleans up property trusts,  if you want secure place to invest, make it a bank or building society.

Unless the government and the industry is able to establish confidence in the managed fund business, then only a new generation of suckers will invest, and in time many of them will end up just as we have.

I've often thought how stupid City Pacific Limited (CPL) was - if it would have simply continued to shear out its fees from the FMF and the borrowers - if it had ensured the LVRs were low - if it had ensured that security for the loans was the same as a bank lender - and if it had not engaged in all the other self-interested, greedly, nepotic transactions - then I believe both the FMF and CPL would be strong today.

To study CPL is to study greed, self-interest, and stupidity.

Thank you for your support of the letter to the finance minister.

http://www.moneymagik.com/letter.pdf

It is very much appreciated.


----------



## Mary Lynch (5 November 2009)

I found "Money Magic" sinuous, convoluted and difficult to finish reading, much as I appreciate the effort that has gone into putting it together.  It needs a thorough editing.     I am sorry but I couldn't sign it as it is.


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## doctorj (5 November 2009)

mellifuous said:


> The link is:
> 
> http://moneymagik.com/letter.pdf



What do you hope to achieve sending that?  Have you had anyone with experience with managed funds give it a read and give you some critical feedback?


----------



## mellifuous (5 November 2009)

doctorj said:


> What do you hope to achieve sending that?  Have you had anyone with experience with managed funds give it a read and give you some critical feedback?




nothing.
no.
like everything else, it's a dud.
thanks for your wise counsel.

no, i guess I should have went to Phil Sullivan, or Michael King.. they could give me some insight.

maybe to ASIC..

maybe to Mary Lynch.

'sinuous' -- why?   

no constructive criticism from ANYBODY.. and I called for, in fact I've nearly begged for it..

but, nothing,,,, 

so, we do the best we can...

and that's the truth.


Mary's comments just stun me....  just plain ignorance.


I 'm for supporting the issues, not who writes them.
If she's capable of telling me the errors, then she should do so.


----------



## k.smith (5 November 2009)

Mary Lynch said:


> I found "Money Magic" sinuous, convoluted and difficult to finish reading, much as I appreciate the effort that has gone into putting it together.  It needs a thorough editing.     I am sorry but I couldn't sign it as it is.






mellifuous said:


> I'm starting to do a bit of work on the letter.
> 
> It's located in .pdf format at http://www.moneymagik.com/managed_fund_co-operation_group.pdf
> 
> ...




Mary, the letter is still  a DRAFT....
If you have any ideas, please feel free to contribute...


----------



## doctorj (5 November 2009)

mellifuous said:


> nothing.
> no.
> like everything else, it's a dud.
> thanks for your wise counsel.
> ...



So what do you want to achieve by sending the letter?


----------



## seamisty (5 November 2009)

doctorj said:


> So what do you want to achieve by sending the letter?



From an MFS PIF investor point of view, I would hope to achieve that the disgracefull, irresponsible, deceptive behaviour of previous MFS/OCV directors and some employees which resulted in the stealth of millions of dollars from innocent investors will NEVER EVER be allowed to be repeated!!!!! The regulatory guidelines need to be monitored independantly from outside of managed funds and acted on immediately .

It is a direct result of sending letters similar to the propsed one that we now have a class action, a senate enqury and finally ASIC intervention.

If individuals did not show initiative and instigate enough NOISE to be heard, who do you think would have looked after our interests ? Financial advisors, fund managers?  Seamisty


----------



## mellifuous (5 November 2009)

doctorj said:


> So what do you want to achieve by sending the letter?




I want to bring to the  attention of law makers the plight of members of non-liquid listed and unlisted managed funds for my benefit, and for the benefit of unit holders in the FMF and other funds - yes, even for the benefit of critics who find themselves locked up in these funds too.

I'm guessing that you, DoctorJ, are not a loser in one of the FMF, MFS, ACR, or Westpoint,  otherwise you might think differently.  And since you seem a learned man, and if you were caught up, you would be in there 'boots and all' to do whatever could be done to better your chances of getting the most of what is left of your investment.

Yes, I'm not the greatest writer, and I've never professed to be so.  However, the greatest writers are not here - we are all just ordinary people trying our best.

If we don't this (and there are people who agree with what we're doing), then nothing will be done - and like it not, we have to accept that something has to be done.

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/REP_139.pdf/$file/REP_139.pdf

Now, the abovementioned report is headed "Report on Submission for CP100 - Unlisted Property Schemes - Improving Disclosure for Retail Investors'.

ASIC wrote to 98 responsible entities of unlisted property schemes seeking their feedback on CP100 (about the development of RG46, Improving Disclosure for Retail Investors).

ASIC received 23 written responses - perhaps Wellington Capital and City Pacific contributed, BUT, investors didn't - because investors weren't asked to contribute.

Investors weren't canvassed, it was all about disclosure by managers who partake in the input of information collected in order to make  legislative and/or policy changes - so, have a look at the history of the managed funds with respect to disclosure: City Pacific's FMF and IF, MFS's PIF, Westpoint, and ACR to name a few - what chance do we have? zilch.

Ok, we face criticism and lack of support, and the english might not up to Mary's standard, but we try - we are going to send this document when we're satisfied that all constructive input has ended.  So, Mary if you want to help, get with it.

I learnt a long time ago, that criticism is always leveled at those who 'do' - I can handle that (sometimes).


----------



## doctorj (5 November 2009)

OK - so you want to achieve two things.
(i) Get as much money back as you can
(ii) Stop it ever happening again

Can I suggest you focus on one at a time - focus everything (including any letter you might send) on getting your money back first, then worry about reforming the industry later.


----------



## mellifuous (5 November 2009)

doctorj said:


> OK - so you want to achieve two things.
> (i) Get as much money back as you can
> (ii) Stop it ever happening again
> 
> Can I suggest you focus on one at a time - focus everything (including any letter you might send) on getting your money back first, then worry about reforming the industry later.




With respect DoctorJ... read all about the matters and then make comment.

In our opinion, then is a positive step to getting our money back.

All the matters raised relate to where we are now - they are not an attempt to cause legislative change for the future, but are an attempt to  change legislation and/or policy NOW.

Thanks.

ps. by the way, thanks for the best bit of banter we've seen on this thread..

good onya.

pps. from the ASIC report

"... Some respondents, although acknowledging the importance of the information, queried its usefulness to retail investors. ..."


----------



## doctorj (5 November 2009)

mellifuous said:


> With respect DoctorJ... read all about the matters and then make comment.
> 
> In our opinion, then is a positive step to getting our money back.



Right.  Good luck taking on Australian legislation and international accounting standards.


----------



## mellifuous (5 November 2009)

doctorj said:


> Right.  Good luck taking on Australian legislation and international accounting standards.




Thank you, we will but try.  I really appreciate your attempt to help.
Thank you for that too.


----------



## k.smith (5 November 2009)

doctorj said:


> So what do you want to achieve by sending the letter?




I intend sending this letter, and more and more to follow if need be..

Unitholders have a right to have a statutory entity appointed by ASIC to represent them.

As long as the input that forms the laws  come from the industry itself, unitholders will be helpless.



http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/REP_139.pdf/$file/REP_139.pdf


page 8"......Some respondents, although acknowledging the importance of the

information, queried its usefulness to retail investors. Although we have

simplified some of the disclosure principles, we do not consider that retail

investors should be denied important information on the basis that they may

not understand it (particularly as there is no clear empirical evidence of this

and varying levels of financial literacy amongst retail investors). We are also

publishing an investor guide to help investors understand the disclosure

principle information....."



page 23"...

Submissions said that investment ratings were useful to retail investors.

However, several submissions noted the difficulties that retail investors face in

interpreting investment ratings. Some submissions considered that retail

investors placed too much weight on investment ratings......"



The above comments are an indication of how unrepresented unitholders are.
We should be pressing for a PDS that the average investor understands, and there should be a criteria for assessing that they do....our why else should they be advertised in the general community..???

We are trying to do something about it...


----------



## doctorj (5 November 2009)

mellifuous said:


> Thank you, we will but try.  I really appreciate your attempt to help.
> Thank you for that too.



I'll offer you one more... consider it a tax deduction.


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## mellifuous (5 November 2009)

doctorj said:


> I'll offer you one more... consider it a tax deduction.




yes, I have that opportunity and it never leaves my mind - but, that's not the case for thousands of investors.    They lose what they lose - as you are aware, capital losses cannot be offset against income.  However, if you tell me I'm wrong, then I'll be a very happy fellow.

For entities with property sitting in the wings capable of being sold at a handsome  profit, well, they'll get relief, but it never all comes back.

Thanks.


----------



## k.smith (5 November 2009)

seamisty said:


> From an MFS PIF investor point of view, I would hope to achieve that the disgracefull, irresponsible, deceptive behaviour of previous MFS/OCV directors and some employees which resulted in the stealth of millions of dollars from innocent investors will NEVER EVER be allowed to be repeated!!!!! The regulatory guidelines need to be monitored independantly from outside of managed funds and acted on immediately .
> 
> It is a direct result of sending letters similar to the propsed one that we now have a class action, a senate enqury and finally ASIC intervention.
> 
> If individuals did not show initiative and instigate enough NOISE to be heard, who do you think would have looked after our interests ? Financial advisors, fund managers?  Seamisty




Yes, Seamisty, that is exactly what we must make a lot of noise about..



in this document

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/REP_139.pdf/$file/REP_139.pdf

Table 1: Unlisted property scheme coverage from consultation
Number of responsible entities visited 24
Percentage of total responsible entity population 25%
Number of unlisted property schemes those
responsible entities represent
160
Percentage of total number of schemes 56%
Assets managed by responsible entities visited $16.58 billion
Percentage of total assets under management of all
responsible entities of unlisted property schemes
60%
Written submissions from various sources 23

And yet the details of who these responsible entities whose input into this ASIC report are "confidential"...


----------



## simgrund (5 November 2009)

Mary Lynch said:


> I found "Money Magic" sinuous, convoluted and difficult to finish reading, much as I appreciate the effort that has gone into putting it together.  It needs a thorough editing.     I am sorry but I couldn't sign it as it is.



Dear Mary,
The draft is easy to follow if you do not go into "MONEYMAGIC" itself.
The draft of 12 pages can be worked on by:
    # isolating or marking the "Amendments to the Act" sections.
    # cut and paste onto your own Word doc of these sections _sans_
       commentary which confuses you
I simply printed them out and found it easier to go through.
You will find a lot of sense in the amendments proposed.
And your support is needed for obvious reasons.
With best wishes, simgrund


----------



## mellifuous (5 November 2009)

When I watch videos about the guy who complained to the S.E.C. (U.S. equiv. to ASIC), I'm able to empathize with him.   He knew he was right but nobody would listen.

So, it's not always the case that the majority are right, and it may be that the majority are not  right in the majority of cases.

When I look at the submissions made to the Senate Finance Inquiry, I'm struck by the fact that only four submissions were made on behalf of the FMF (3 of them mine) and about the same number for the MFS fund.

Storm members made the bulk of the submissions - it's clear that many couldn't use computers because they submitted hand-written letters, some of the writing indicated that the authors were aged - but they made submissions, and as  a consequence the Inquiry is probably more widely known as the 'Storm Inquiry'.

In each of the MFS and FMF there are about 10,000 investors - that's 20,000 entities, yet no more than 8 submissions.  Contrast that with Storm and it's not difficult to understand why they've taken the front seat at  the inquiry.

I'm guessing the subject of 'managed funds' at the Inquiry  will fail to gain too much traction at all.

So, if  it's obscurity that you want, then you've got it.

If you want to do something for your own benefit, then  you have to participate in anything that will get our plight in front of those who matter.

Right now, we simply don't matter - we cannot allow the status quo to continue.

Oh! you say, look at ASIC suing here and there - and they are - but I believe this splurge of activity by ASIC is to dress up their tarnished reputation, in a way not unlike the facade of a building on a movie set.

Yes, it's a hopeful sign and the words are good - but, it can't help us where we are.

The choice is simple, remain in obscurity or put our plight in the limelight.


----------



## simgrund (5 November 2009)

mellifuous said:


> Hi Simgrund,
> 
> I'm starting to get what you mean - you mean a fund into which retired persons would be able to invest with security - I'd guess at this time that's called  a bank or a building society.....................................
> 
> ...




*Yes Mellifuos, this nails all.

While building societies are really co-operative banks, a semi-investment tier can be built above it with the bullet - proofed regulatory regimes in place.
The good doctorj's comments should not be a deterrant to us.
It is now clear that ASIC is off the fence and firmly in the galloping paddock.
Let's keep astride with all our contributions.
Keep up the good work.
Regards, simgrund*


----------



## mellifuous (5 November 2009)

simgrund said:


> *Yes Mellifuos, this nails all.
> 
> While building societies are really co-operative banks, a semi-investment tier can be built above it with the bullet - proofed regulatory regimes in place.
> The good doctorj's comments should not be a deterrant to us.
> ...




Thanks very much Simgrund.   I just noticed a posting on the MFS forum in relation to this article:-

http://www.goldcoast.com.au/article/2008/09/05/15894_gold-coast-business.html

"... Ms Hutson has said a wind-up would deliver only 14c in the dollar for investors who poured $770 million into the fund.

She said Korda Mentha had estimated it would be worth 45c in the dollar as a going concern. ..."

To me, unless representations (statements investors rely on) as to the future are backed with evidence and are qualified, then how can investors make informed decisions.

This issue is dealt with on page 3/4 of the letter/submission.


----------



## Mary Lynch (5 November 2009)

Thanks Simgrund.   
I am sorry, my personal re-action to the draft ( I didn't realise it was only a draft)  seems to have caused a big response.

I had no intention of that happening.  Please don't read too much into what I said...it wasn't the facts; I am not armed with the facts the way many of you are. It  was merely my personal EXPERIENCE when I read it.

Please don't get me wrong...I appreciate enormously the work that you guys and women have been putting in. I only wish that I was cluey enough, young enough, and had enough time to be of some use.


----------



## mellifuous (5 November 2009)

do you think the following information is enough to make an informed decision on?

Explanatory Memorandum of Wellington's proposal for the MFS PIF
http://www.newpif.com.au/EGM08/Explanatory%20Memorandum.pdf

Page 22 - 
Asset backed security as at 31 Dec 2007 $307m
carry value 30 May 2008 $267.55m
est. sale value 30 May 2008 $96.66m


Page 25 - 
Asset Backed Securities
Sydney based company $20,000,000
Sydney based securities $14,700,000
Living and Leisure Group $493,000
Living and Leisure Australia Trust loan $27,000,000
Diversified Trust $905
South East Queensland based security $19,265,753
Diversified Trust $10,084,932
South East Queensland based securities $5,110,638
est. sale value 30 May 2008 $96,655,228

Page 22 - 
Units in Managed Investment Scheme  as at 31 Dec 2007 $161m
carry value 30 May 2008 $93.3m
est. sale value 30 May 2008 $5.6m

Page 25 - 
Units in Managed Investment Scheme
Unlisted property trust $3,598,019
Unlisted property trust $2,001,049
est. sale value 30 May 2008 $5,599,068

Page 22 - 
Fixed interest securities as at 31 Dec 2007 $117.4m
Carry value 30 May 2008  $16.9m 
est. sale value 30 May 2008 $15.5m

Page 25 -
Fixed Interest Securities 
Unlisted fixed interest security $9,512,902
ASX listed debt $2,360,000
ASX listed fixed security $3,650,000
est. sale value 30 May 2008$15,522,902


----------



## mellifuous (5 November 2009)

How about this statement on page 30 of the following:-

http://www.newpif.com.au/EGM08/Explanatory%20Memorandum.pdf


"... 
Capitalisation of loan interest

Most loans made by the Fund involve capitalisation of interest, which is where the interest is not paid by the borrower during the period of the loan but is added to the loan over the term of the loan.

This is typical for construction loans where interest is capitalised during the construction and then paid when the project is complete. ..."

Maybe I'm wrong, but I think Ms. Hutson is mis-describing 'accruals accounting' and not describing capitalisation.

I thought 'capitalisation' meant that in the event the loan (including interest)  was not paid in one period then the loan would be considered to be in default and then interest would be applied to the sum of capital and the unpaid interest - a default interest rate normally applies in such circumstances.

City Pacific done great deals like that - a loan over two years .. nothing was paid in the first year, and at the end another loan was taken out to pay the first loan out - then it looked like the loan book was 'rolling over' - in reality it was only the investors who were 'rolling over'.

Please help me understand...


----------



## doctorj (6 November 2009)

mellifuous said:


> Please help me understand...



It's common lending practice - you want to match the repayments with the underlying cash flow of the business you're funding. In the case of construction, you draw down the loan incrementally over the period of construction, but don't typically realise any cash flow until you sell it following completion.

Which brings me back to the point I made yesterday - you ought to focus your letter on getting your money back and have someone with some background in the subject matter review it.  If you attempt to fight too many battles you don't have a hope of winning, you risk losing credibility and increase the (already very high) probability of being ignored completely.


----------



## mellifuous (6 November 2009)

doctorj said:


> It's common lending practice - you want to match the repayments with the underlying cash flow of the business you're funding. In the case of construction, you draw down the loan incrementally over the period of construction, but don't typically realise any cash flow until you sell it following completion.
> 
> Which brings me back to the point I made yesterday - you ought to focus your letter on getting your money back and have someone with some background in the subject matter review it.  If you attempt to fight too many battles you don't have a hope of winning, you risk losing credibility and increase the (already very high) probability of being ignored completely.




yes, we know that .. i know about accruals accounting .. and I know that no payments are made until the end of a 'development' - I understand that.

The issues relate to that letter.  

disclosure of the details  is an issue in the letter - 

representations is an issue in the letter.

just how investors are supposed to make decisions with a lack of information is in the letter.

It's all in the bloody letter.

you win.. i give up

goodbye


----------



## k.smith (6 November 2009)

ASIC nets fewer fish
Friday, 06 November 2009 | The Australian Financial Review | Patrick Durkin 

"......The Australian Securities and Investments Commission secured fewer convictions and jail sentences last financial year, a time when $771 billion was wiped from the stockmarket and investors lost $23 billion in corporate collapses....."

well, hope they (and us ! ! ) have a better year this financial year.! !


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## cuttlefish (6 November 2009)

mellifuous said:


> [*page 55   Grande Pacific limited holds 15.09%   17,690,815shares*




mellifuous - I believe the Grande Pacific referred to in that report is a privately owned singapore based investment company - i.e. a completely different company to the Australian one referred to in the rest of your post.


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## k.smith (7 November 2009)

http://www.theaustralian.com.au/bus...funds-management/story-e6frgad6-1225794167214

Give investors powers to decide: funds management Phillip Gray From: The Australian November 04, 2009 12:00AM 

"....At present there is no requirement for any -- let alone full -- disclosure of Australian managed funds' underlying holdings (the stocks, bonds and other securities the fund owns). Searching across different fund managers' websites reveals a mishmash of approaches. Some fund managers provide monthly updates of their 10 biggest positions only, some quarterly or six-monthly and some none at all.

Periodic disclosure of full portfolio holdings would have several benefits. First, it would enable investors, financial advisers and other market participants to evaluate whether a fund is staying "true to label" in terms of market capitalisation and investment style characteristics.

Second, it would provide greater opportunity for detection of undesirable behaviours such as "window-dressing" (the practice of turning over a fund's portfolio holdings close to a reporting period, selling poorly performing companies and buying strongly performing ones to make the fund's performance look better)......"


Now wouldn't that be a step in the right direction....


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## k.smith (11 November 2009)

The letter was sent to Lindsay Tanner's Office yesterday.
Thank you to all who contributed.


----------



## seamisty (11 November 2009)

k.smith said:


> The letter was sent to Lindsay Tanner's Office yesterday.
> Thank you to all who contributed.



Thanks k.smith and mellifuous, IMO it is only a matter of time before we will see intervention and regulation regarding the  overseeing of such funds as in the previous OCV PIF and the FMF. Investors have been trying to draw recognition to the fact that investors were enticed to invest in these funds with the glowing recommendations from supposedly recognised fund rating experts, ie lonsec, morningstar etc, not to mention advisers and upbeat media reports and from the funds themselves.

 If the problems of lack of corporate regulation is not adressed, these funds and this type of investing will become redundant. 

I am in contact with hundreds of people who reiterate they will NEVER INVEST in products such as these again and why would you take the risk? Seamisty


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## k.smith (12 November 2009)

http://www.smh.com.au/business/shareholder-activism--an-insiders-perspective-20091111-i9qv.html
".....When we requested the company’s register to mail our fellow RHG shareholders, we were provided with the names and addresses in a PDF file. Apart from being denied email addresses (a more cost-effective way for shareholders to communicate with each other), the format of the registry was frustrating, with our mailhouse unable to process the names in the PDF format.

That churlish move slowed us down for a few hours while we scoured the internet for the requisite software to ‘‘unscramble’’ the format of the registry and allow us to present it to the mailhouse in a more user-friendly spreadsheet format.

It might seem reasonable to ask why share registries aren’t making things easier. But when you consider the incentives involved, the mystery dissolves. Just think who appoints the registry to the job and signs off on their invoices...."



I believe investors in both City Pacific and MFS can identify with problems obtaining the "disk"...( or in the above report, the share registry..)
It is about time that this issue is addressed. When unitholders (or shareholders) are asked to make decisions regarding their investments, isn't it just commonsense to form your decisions on information on all the angles..?? Why would you want to make decisions when you NOW KNOW that information presented to you is often only part of the story ?


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## k.smith (14 November 2009)

http://www.brisbanetimes.com.au/bus...g-even-as-regulators-hover-20091113-ient.html
Why financial planners are smiling even as regulators hoverNovember 13, 2009 

"..........But disclosure and fiduciary duty are totally different concepts, in practice and in law, and they really are just hijacking the language to make it sound all above board......."

"........So instead of a financial adviser being paid a 5 per cent trailing commission forever for sticking your money into a particular fund, he or she now will be paid a 5 per cent commission on the whole of your investment regardless of whichever product they direct it towards.

It is slightly better than a commission, because it eliminates the bribery angle, but it is an ongoing fee nonetheless, a fee for doing no work and providing no advice........"

"......advisers will have the option of calling themselves salesmen - which is precisely what they are. Those who opt to maintain the title of financial adviser will be subject to a great deal more rigour and possibly much less in the way of fee income.

Want some free financial advice? Offer to pay your financial adviser up front, say 5 per cent of the total you want to invest. Otherwise you will pay 5 per cent every year for the next 10 years or more. You do the maths. Craig Dunn already has......."


Source: The Sydney Morning Herald

seems to me that when the regulators close one door, there are numerous new doors opening, they will be presented to us all squeaky clean and part of the great post GFC "clean up" in the industry, but it will be just more of the same.
Investors will feel safe, because the "language" of these products sounds so "above board"...so, the doors will just revolve again...

http://www.smh.com.au/business/phoenix-directors-are-feeding-off-failure-20091113-ietw.html
Phoenix directors are feeding off failureADELE FERGUSON
November 14, 2009 

"........CORPORATE Australia is littered with company directors who have managed to survive multiple company failures, a trend that suggests illegal ''phoenix'' companies are on the rise......."

"......Even more alarming, of the 10,264 companies that went belly up in the year to June 30, a staggering 43 per cent involved companies with directors of previously wound-up companies....."

".....At its core, phoenix activity raises questions about the role of insolvency practitioners, the regulator, the issue of assetless liquidations, the priority regulators give to pursuing serial offenders, how much support they get from the government, and how phoenix activity is exploited by ''legitimate'' companies to gain an edge. By planning not to pay their bills once work is complete, phoenix companies have a huge commercial advantage over their competitors......"


it is great to read these articles...at least there are some journalists out there who are bringing some of these issues to the attention of the public.


----------



## Mary Lynch (17 November 2009)

So where the hell are ya?

What!!! No response to the fact that our units are now valued at 48 cents!

Well...tell you what, I wouldn't mind that 48 cents!


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## k.smith (18 November 2009)

http://blogs.nzherald.co.nz/blog/in...ure-complaint/?c_id=1502776&objectid=10610046

".....The 'frozen funds' case also highlighted a glaring anomaly in the financial disputes resolution system .................

Thankfully, that is about to change. All financial service firms and advisers will from (sometime) next year will have to belong to an external disputes resolution body. And the complaints specialists are starting to appear..........."


A Disputes Resolution Body...
A central point of contact whereby investors could have a legal representation .....
Instead of cyberspace....
What a sensible idea.....


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## doctorj (19 November 2009)

k.smith said:


> Thankfully, that is about to change. All financial service firms and advisers will from (sometime) next year will have to belong to an external disputes resolution body. And the complaints specialists are starting to appear..........."
> 
> 
> A Disputes Resolution Body...
> ...



As far as I know, all holders of an Australian Financial Services License are already required to hold a current membership to an approved external dispute resolution body.  The most common in Australia is FICS (www.fics.asn.au), but this does vary, so check your PDS or similar.  Those comments may be in reference to NZ law.


----------



## simgrund (19 November 2009)

doctorj said:


> As far as I know, all holders of an Australian Financial Services License are already required to hold a current membership to an approved external dispute resolution body.  The most common in Australia is FICS (www.fics.asn.au), but this does vary, so check your PDS or similar.  Those comments may be in reference to NZ law.




This is an extract and it appears that PIF in its present form without an eligible PDF would not have a look in.

[[[  How to Lodge a Dispute: Investments, Life Insurance & Superannuation

The following processes apply to disputes about Investments, Life Insurance & Superannuation. This information is provided as a guide. If you have any questions, please call the Financial Ombudsman Service on 1300 78 08 08.

PLEASE NOTE:
The Financial Ombudsman Service does not deal with disputes regarding decisions by trustees of regulated superannuation funds. This includes disputes relating to payments of superannuation benefits by fund trustees, and superannuation fund performance. If your dispute is in relation to a regulated superannuation fund, the appropriate body for you to contact is the Superannuation Complaints Tribunal. ]]]


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## mellifuous (23 November 2009)

Hi Simgrund,

I just wanted to let you know that I sent the letter to Mr. Tanner's office.

His office has since advised me that the letter has been redirected sent to the Minister for Financial Services, Superannuation and Corporate Law, Mr. Chris Bowen M.P.

A copy of the completed letter is at http://www.moneymagik.com/latest.pdf

I'm aware there are errors and that it doesn't meet the high standards of those amongst us who are skilled to remedy such errors, but in the end it was just a case of something being better than nothing.

I took your advice and put the suggested amendments at the back for document.

Thanks for your help. 

Allan.


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## simgrund (23 November 2009)

mellifuous said:


> Hi Simgrund,
> 
> I just wanted to let you know that I sent the letter to Mr. Tanner's office.
> His office has since advised me that the letter has been redirected sent to the Minister for Financial Services, Superannuation and Corporate Law, Mr. Chris Bowen M.P.
> ...




It is good to have the letter out. Well done Mellifuos!

We all need to be reminded daily that only through unrelenting pressures like this combined effort will the slow wheels of supervisory conscience start turning in; if not in our favour today, than in favour of next generations if retirees.
I make a distinction between *retirees* wishing to secure sustainable income and investors/speculators who take conscious risks with disclaimer clauses written into "contracts".
Again, thanks, simgrund.


----------



## simgrund (23 November 2009)

simgrund said:


> .......................correction (Mellifuos!) Mellifuous;
> (if retirees.) of retirees; and cancel one "at"
> sorry, still learning.


----------



## mellifuous (24 November 2009)

simgrund said:


> simgrund said:
> 
> 
> > .......................correction (Mellifuos!) Mellifuous;
> ...


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## mellifuous (25 November 2009)

AN ANNUAL (OR BI-ANNUAL) GENERAL MEETING
FOR MANAGING FUNDS (LISTED/UNLISTED)

A very astute unit holder has come up with a very good idea - an annual general meeting for managed funds.

Companies have them - managed funds don't.

Write to the Hon Chris Bowen MP and request that the Corporations Act be amended to incorporate annual (or bi-annual) general meetings for managed funds.

A great idea. 

http://www.chrisbowen.net/contact-chris-bowen/home.do


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## prawn_86 (25 November 2009)

Managed funds are not listed companies, therefore there is no reason they should be opened up to their unit holders. If your going to try (unsuccessfully) to impose that, it means that to be fair every other company/business etc would be legally required to have one also...

When you invest in a managed fund you are putting your trust into those fund managers, and you should have done your research before hand. You are not buying a peice of the company, you are simply giving them your money to try and increase its value.

If you want the security and transperancy of a listed company buy an LIC like ARG or AFI.


----------



## mellifuous (25 November 2009)

prawn_86 said:


> Managed funds are not listed companies, therefore there is no reason they should be opened up to their unit holders. If your going to try (unsuccessfully) to impose that, it means that to be fair every other company/business etc would be legally required to have one also...
> 
> When you invest in a managed fund you are putting your trust into those fund managers, and you should have done your research before hand. You are not buying a peice of the company, you are simply giving them your money to try and increase its value.
> 
> If you want the security and transperancy of a listed company buy an LIC like ARG or AFI.




Yes, if I was as wise as you then I wouldn't be in this position - but, since I am in this position, then I'll do what I have to do.


Thanks.


----------



## prawn_86 (25 November 2009)

mellifuous said:


> Yes, if I was as wise as you then I wouldn't be in this position - but, since I am in this position, then I'll do what I have to do.
> 
> 
> Thanks.




Im not saying anything about you, im merely saying that your wasting time and effort on tryng to get them to hold AGMs.

I think share holder/unit holeder activism is a great thing, and that management of companies should be much more accountable than they are, so i appluad you for chasing things up, as opposed to most apathetic Aussies, but i think there are some things you should focus your efforts on, rather than using a 'scattergun' approach trying to implement every idea you come across.


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## mellifuous (25 November 2009)

prawn_86 said:


> Im not saying anything about you, im merely saying that your wasting time and effort on tryng to get them to hold AGMs.
> 
> I think share holder/unit holeder activism is a great thing, and that management of companies should be much more accountable than they are, so i appluad you for chasing things up, as opposed to most apathetic Aussies, but i think there are some things you should focus your efforts on, rather than using a 'scattergun' approach trying to implement every idea you come across.




Well, with respect, you did - and it pi$$es me off.  I know that I made a mistake, and I try my best to overcome it as best as I can.

Well, 'scattergun' or not, if I didn't think it was a good idea, then I wouldn't be bothered with it.

Hey, believe it or not, I don't try to  implement  'every idea I come across' - I only try to implement those ideas that I think are good.

I worked hard for my money and I'll work hard to get it back.

Still, even a 'scattergun' is not a bad thing, many a clay (and live) target has fallen to the ground in pieces by way of a shot gun.

My greatest hope would be to see more investors get involved - you are right, without the numbers its a real long shot for any idea (especially with a 'scattergun').

I can afford to lose  the whole of this investment (but, I don't want to) - others cannot - and strangely, it's those who will suffer the most  that do the least to get their money back - maybe it's because of age, maybe because of other reasons.

Still, I'll beat my head against the wall of apathy  

I must be crazy - I actually enjoy it.


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## mellifuous (25 November 2009)

mellifuous said:


> AN ANNUAL (OR BI-ANNUAL) GENERAL MEETING
> FOR MANAGING FUNDS (LISTED/UNLISTED)
> 
> A very astute unit holder has come up with a very good idea - an annual general meeting for managed funds.
> ...





**** CORRECTION ****

The heading should have been:-

AN ANNUAL (OR BI-ANNUAL) GENERAL MEETING
FOR *MANAGED *FUNDS (LISTED/UNLISTED)

My email has been sent to Mr. Bowen's office.


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## k.smith (26 November 2009)

prawn_86 said:


> "............When you invest in a managed fund you are putting your trust into those fund managers, and you should have done your research before hand. You are not buying a peice of the company, you are simply giving them your money to try and increase its value............"
> 
> 
> 
> ...


----------



## seamisty (26 November 2009)

'unlike fund managers, unitholders do not have the benefits of input from the legal profession....we are very alone in this.'

U bet we are alone k.smith, treated like a bunch of geriatric, senile old farts posing as mushrooms of inferior intellect!!! You can bet your butt though, that at the end of the day that it is the unitholder that ultimately gets to pick up the tab for all that very expensive 'input from the legal professionals', auditors, fund rating agencies etc. 

It also appears that investors rely heavily on the media for any relevant information regarding their individual funds. Unfortunately that information is sometimes totally incorrect and on two occassions recently in the case of the Wellington Capital Premium Income Fund remained uncorrected even after the journalist and the source quoted had been informed of errors in the article which could be substantiated with the CORRECT information.

Conclusion:: Fund managers appear to want total control and irrespective of what was promised to gain that control, at the end of the day investors are just a means to an end. Seamisty


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## mellifuous (26 November 2009)

seamisty said:


> 'unlike fund managers, unitholders do not have the benefits of input from the legal profession....we are very alone in this.'




More to the point, unit holders do not have access to the legal profession paid for by the fund. 

The fund manager is in a much more powerful position that we are - when an issue arises, such as the variable unit price, then the manager can expend the fund's resources (for what I would say is the manager's own interests) to carry out constitutional amendments.

On the other hand, to defend against such a move, unit holders have to rely on their own wits and resources.

Yes, a very unfair situation - it seems that the legislature has placed far too much confidence in Corporations Act s.601FC(1)(c), that a manager will put unit holders interests ahead of its own.


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## mellifuous (26 November 2009)

Only one slight reference to Westpoint.

Over 50,000 investors with heavy losses.

That's it.


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## mellifuous (27 November 2009)




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## k.smith (4 December 2009)

What do burnt investors think about this...

My mother, who is in her late 80s, has $50,000 invested in the now Pacific First Mortgage Fund.
The units in the fund are classed as part of her assets by centrelink.
She has had no distributions/redemptions for nearly two years now.
She has just filled in yet another load of paperwork to let centrelink know that the units are now valued at 48cents...despite the FACT that she has STILL received no income from this investment for nearly two years.At the time this investment was returning around 8.5%pa, around $160.00 per fortnight.
The adjustment from the 63cent per unit value to the 48cents per unit value means a difference of an extra $36.00 per fortnight more in her pension for her.
This may all sound rather insignificant to a lot of readers, but this is the reality of what is happening to a lot of really elderly people.
They are distressed and confused as to how they could possibly have lost so much, with so little explanation.
They are distressed and confused as to why and how often they have to fill in paperwork to centrelink...86 years old, unbelievable ...
Is this the way that we treat elderly people, people who have worked all their lives, paid their dues and taxes and helped to build this country?
Why was this not addressed in the Rippoli Report?
When are we going to give the elderly investors the help and dignity that we owe them for their contribution to our country?
These people are the truly forgotten people in this mess,  vunerable and without a voice.


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## demodocus (5 December 2009)

k.smith said:


> What do burnt investors think about this...
> 
> My mother, who is in her late 80s, has $50,000 invested in the now Pacific First Mortgage Fund.
> The units in the fund are classed as part of her assets by centrelink.
> ...




This doesn't sound quite right. Although the units are declared to Centrelink and form part of your Mother's assets under that organisations income test rules the units in PFMF are NOT taken into account in deriving the size of her pension under the "income rules". They were exempted from the "deeming" provisions by Minister Macklin on 23rd December 2008. If this is not happening in her case then hie thee at thy fastest footfall to Centrelink where they'll correct the error and pay a back slab of pension.
If she's assessed under the Assets Test then I'm not sure, but it's still worth a call to Centrelink. I've always found them helpful and co-operative.


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## k.smith (5 December 2009)

demodocus said:


> This doesn't sound quite right. Although the units are declared to Centrelink and form part of your Mother's assets under that organisations income test rules the units in PFMF are NOT taken into account in deriving the size of her pension under the "income rules". They were exempted from the "deeming" provisions by Minister Macklin on 23rd December 2008. If this is not happening in her case then hie thee at thy fastest footfall to Centrelink where they'll correct the error and pay a back slab of pension.
> If she's assessed under the Assets Test then I'm not sure, but it's still worth a call to Centrelink. I've always found them helpful and co-operative.




Demodocus,
My mother is assessed under the Assets Test. These units are still assessed as to their now 48cent value, and each time their value changes there is another flurry of paperwork.
All the "helpful and co-operative staff" at Centrelink are not the issue here...it is the fact that very old people have to go through stressful and complicated  processes to get their entitlements. Perhaps people who are assessed on their income are in a clearer position...that I do not know.


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## demodocus (5 December 2009)

k.smith said:


> demodocus,
> My mother is assessed under the Assets Test. These units are still assessed as to their now 48cent value, and each time their value changes there is another flurry of paperwork.
> ..it is the fact that very old people have to go through stressful and complicated  processes to get their entitlements.




What flurry of paperwork? I simply post a new Asset declaration together with a copy of the notification of change of value from Trilogy to Centrelink. Nothing stressful or complicated. I trade shares and have to advise them every time I buy and sell. Easy peasy although I do resent having to pay the $0.55 postage.

I'm old too and I can understand yr Mother not wanting to bother with all this fol de rol, but that's what you're there for, isn't it


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## simgrund (5 December 2009)

k.smith said:


> What do burnt investors think about this...
> 
> My mother, who is in her late 80s, has $50,000 invested .....................
> Is this the way that we treat elderly people, people who have worked all their lives, paid their dues and taxes and helped to build this country?
> ...




That is exactly why I am pushing for a proposal for a distinct "retiree only" financial product sitting just above bank deposit category but giving a more dignified return to this underprivileged class of investors. A category with "bullet proof" protective legislation behind it. 
How about it?


----------



## k.smith (6 December 2009)

demodocus said:


> What flurry of paperwork? I simply post a new Asset declaration together with a copy of the notification of change of value from Trilogy to Centrelink. Nothing stressful or complicated. I trade shares and have to advise them every time I buy and sell. Easy peasy although I do resent having to pay the $0.55 postage.
> 
> I'm old too and I can understand yr Mother not wanting to bother with all this fol de rol, but that's what you're there for, isn't it




I guess for people who trade in shares and have the knowledge of the correct forms to fill out at their fingertips, this may very well be "easy peasy"..

lots of over eighties can't even walk to the letter box..
don't know about the correct  "asset declaration" forms...
don't have that back-up family to lean on..
that is what I am talking about..
for those people it is not so easy peasy...


----------



## demodocus (6 December 2009)

k.smith said:


> I guess for people who trade in shares and have the knowledge of the correct forms to fill out at their fingertips, this may very well be "easy peasy".. don't know about the correct  "asset declaration" forms..




People who trade in shares are no different than those who stick their money in deposits, we're just a bit more proactive, even at my age of 84. There are no "correct" reporting forms. You simply tell 'em in writing or over the phone. 



> don't have that back-up family to lean on..
> that is what I am talking about.. for those people it is not so easy peasy...




If those folks can't communicate by phone, have no family assistance, and can't walk to the post box then they should be in a different sort of accommodation.

Anyway, I don't want to do battle with you over elder-care. That's pointless.

I wish you and your Mother well.


----------



## mellifuous (6 December 2009)

demodocus said:


> If those folks can't communicate by phone, have no family assistance, and can't walk to the post box then they should be in a different sort of accommodation.




Well 'demodocus', it sounds like you've got your life together and I'm impressed by your self-reliance and obvious keen knowledge of language.

However, we don't live in a perfect world, and what some of us find easy, others find downright oppressive.

Further I think people like 'Mr. Smith' feel a double oppression, one being the oppression brought on by the decimation of their own investments, the other by the oppression brought on by the decimation of an elderly parent's investments.

In ordinary circumstances one is mostly able to deal with one's own problems, but to load on those of a parent's, then it could very well be the 'straw that breaks the camel's back'.

These are very stressful times for many people, and sometimes emotion can override logic.  

I'm pleased to see that you've got a balanced portfolio, but most of the folk who invested in City Pacific and the MFS PIF invested a great deal of their savings, and as consequence, at this time, have lost the whole of their income from those savings.

So, obfuscate logic with emotion, couple that with a loss of income, add to that the loss of income of a parent, and therein lies a lot of problems for a lot of folk - even without the addition of the loss of income by a parent.

I appreciate your postings on this thread.


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## k.smith (6 December 2009)

simgrund said:


> That is exactly why I am pushing for a proposal for a distinct "retiree only" financial product sitting just above bank deposit category but giving a more dignified return to this underprivileged class of investors. A category with "bullet proof" protective legislation behind it.
> How about it?




Simgrund,

Thank you for your constructive contribution.
This article is worth reading...
http://www.smh.com.au/business/prop...about-the-liquidity-crunch-20091203-k8sa.html

"......Many unlisted property funds in Australia are overgeared, in breach of loan covenants and unable to raise money to sort themselves out. Some are selling properties, but this is not enough to bring gearing down. And there is no sign of them being able to lift redemption freezes to return liquidity to the system.

Listed property trusts were able to go to the market and raise $16 billion in fresh equity to reduce their gearing, but the unlisted trusts have not been so lucky......"

"....There is an estimated $68 billion wholesale unlisted property market, with industry funds putting an average of 28 per cent of their assets in unlisted assets and retail master trusts having 9 per cent. With more than $1 trillion of retirement savings sitting in super funds, billions of dollars of our retirement savings are exposed to these unlisted funds.

In most cases, valuations are still overinflated, debt levels are higher than their listed counterparts, accounts are opaque and liquidity issues could become a nasty reality for smaller funds that face debt-refinancing issues at the same time as redemptions from clients......"

Seems to me that there are a lot of people who will be affected by the illiquidity in the unlisted property market. 
What you are suggesting could have a lot of merit.


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## simgrund (8 December 2009)

k.smith said:


> Simgrund,
> "............There is an estimated $68 billion wholesale unlisted property market, with industry funds putting an average of 28 per cent of their assets in unlisted assets and retail master trusts having 9 per cent. With more than *$1 trillion of retirement savings sitting in super funds,* billions of dollars of our retirement savings are exposed to these unlisted funds................
> What you are suggesting could have a lot of merit.




Hello k.smith,

One trllion of a potential avalanche into a black hole??? That is scary. What is a really urgent need now, most would agree, is to insulate the "for retirement only" class of funds from the speculative operations of various markets.
When the Federal Government will finally get around completing the REFORM of the Superannuation, they may legislate for creating a pool of funds with specific designation "for retirement only". 
This would protect would be retirees from any impulses to seek higher  returns and so on. This category would carry solid Government's guarantee of deposits not unlike recently provided to the banks during GFC. We all remember with fondness some state super schemes paying out pensions for the ex contributors. This commitment continues despite liquidity problems. That's why these schemes were closed, most more than a decade.
This proposal is not for the "resurrection" of these schemes as there would be no "contributions" scheme into which to pool future payouts.
A straightforward product with better than today's protective legislation to eliminate even the smallest chance of malintent.
It would carry protective legislation, give no choice of risks and carry usual annuity structures along the lines of Colonial Mutual's allocated pension and the like. 
I believe such a product would be attractive to people who otherwise keep their funds in term deposits as well as those "testing the waters" of thousands of  investment options.
I would like one day to sit down and perhaps with people like mellifuous sketch an outline of a proposal. As you know, no harm in trying.
Mellifuous recently sent a letter to Mr. Bowen with some proposals for protection of investors.
No doubt, a reply will be forthcoming; or not.
But some things came off our collective minds.
regards, simgrund


----------



## Duped (8 December 2009)

prawn_86 said:


> Managed funds are not listed companies, therefore there is no reason they should be opened up to their unit holders. If your going to try (unsuccessfully) to impose that, it means that to be fair every other company/business etc would be legally required to have one also...
> 
> When you invest in a managed fund you are putting your trust into those fund managers, and you should have done your research before hand. You are not buying a peice of the company, you are simply giving them your money to try and increase its value.
> 
> If you want the security and transperancy of a listed company buy an LIC like ARG or AFI.




Technically correct prawn_86 but you overlook these unethical enterprises modus op.  They rely on our lack of detailed knowledge and then dress up these fringe products with credibility to trap us. They profit by preying on confusion. By pushing the limits of the law. Well, that led to losses of billions.  Time to push back. Don't blame us or the regulators.  Blame the unscrupulous lawyers who push push push to please their paying clients.

Look at PIN. It's listed. On the NSX. NSX and ASX listings are not the same you say. Why not? NSX
 has cred.  It was launched by Joe Hockey.  NSX has an MOU with ASIC.  What? Am I expected to go away and study the differences between the NSX and ASX?  Why would I? It has the Commonwealth stamp of approval on it. Twice.

But when you look closely at PIN you see that you're not buying shares in a company, you're buying units in a trust.  A trap for beginners. Even if the beginners spotted that difference, would they  know that a unit trust is a far more opaque operation than a company? You obviously do. I do now; after my financial adviser steered me into PIF. But what about e.g. the farmer who studies years at uni and puts in 70hr weeks to put food on all our tables. What level of financial literacy do you expect from them on top of what they already do to contribute to your quality of life? The answer is - too much.


----------



## k.smith (8 December 2009)

Duped said:


> Technically correct prawn_86 but you overlook these unethical enterprises modus op.  They rely on our lack of detailed knowledge and then dress up these fringe products with credibility to trap us. They profit by preying on confusion. By pushing the limits of the law. Well, that led to losses of billions.  Time to push back. Don't blame us or the regulators.  Blame the unscrupulous lawyers who push push push to please their paying clients.
> 
> Look at PIN. It's listed. On the NSX. NSX and ASX listings are not the same you say. Why not? NSX
> has cred.  It was launched by Joe Hockey.  NSX has an MOU with ASIC.  What? Am I expected to go away and study the differences between the NSX and ASX?  Why would I? It has the Commonwealth stamp of approval on it. Twice.
> ...




Well said Duped....

I would add that fund managers have their entourage of lawyers and legal advisors, often paid for from our fund(s).
I imagine that each  publication that comes from these funds is so carefully constructed  by "the legal team", that the "beginner" would need to get a law degree to have the "financial literacy" to form a true opinion.


----------



## Duped (8 December 2009)

k.smith said:


> Well said Duped....
> 
> I would add that fund managers have their entourage of lawyers and legal advisors, often paid for from our fund(s).
> I imagine that each  publication that comes from these funds is so carefully constructed  by "the legal team", that the "beginner" would need to get a law degree to have the "financial literacy" to form a true opinion.




Too true.  Actually its far worse than that.  Even my financial advisor finally admitted he doesn't really understand the nuances of the trust constitution.  Which is probably why they rely on ratings agencies. That's a FINANCIAL ADVISOR admitting that  prawn_86.  A FINANCIAL ADVISOR.  

IMO if you think that's OK; you're suffering from chronic ethics creep. Oh and I've got some CDO's for you to buy. Don't worry if you don't understand the text of the contracts - all you need to know is that they're AAA rated.  Sound familiar?


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## mellifuous (8 December 2009)

Duped said:


> Too true.  Actually its far worse than that.  Even my financial advisor finally admitted he doesn't really understand the nuances of the trust constitution.  Which is probably why they rely on ratings agencies. That's a FINANCIAL ADVISOR admitting that  prawn_86.  A FINANCIAL ADVISOR.
> 
> IMO if you think that's OK; you're suffering from chronic ethics creep. Oh and I've got some CDO's for you to buy. Don't worry if you don't understand the text of the contracts - all you need to know is that they're AAA rated.  Sound familiar?




An oldie but a goodie:-

"... In a move that highlights the difficulty of regulating ratings agencies, Standard & Poor’s has joined Moody’s in withdrawing its application to supply ratings of corporate bonds and other debt-based securities to retail investors in Australia, after new rules were announced this month by the Australian Securities and Investments Commission.

The rules, which will take effect Jan. 1, are intended to improve the management of risk and conflicts of interest at the ratings agencies, as well as increase transparency. But a clause that requires them to resolve disputes with retail investors through a financial ombudsman is one reason S.&P. is citing for withdrawing from the market, where it is among the three major agencies, alongside Moody’s and Fitch.

“Because the local ombudsman would effectively be second-guessing S.&P.’s analysts, we believe this would ultimately create investor confusion and harm financial markets,” John Bailey, managing director of S.&P. in Australia and New Zealand, said in a statement Wednesday. ..."

http://dealbook.blogs.nytimes.com/2009/11/19/sp-joins-moodys-to-scale-back-australia-ratings/


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## Duped (8 December 2009)

mellifuous said:


> "... we believe this would ultimately create investor confusion and harm financial markets,” John Bailey, managing director of S.&P. in Australia and New Zealand, said in a statement Wednesday. ..."




Ha ha.  What a classic.  So S&P are effectively saying that a second opinion would "create investor confusion and harm financial markets".  What a load of spin. That just demonstrates a lack of professionalism.  What about peer review?  Anyone know of another 'profession' that conducts itself in this manner?

And these are probably the worst of the individuals who are sitting back tutt tutting about the integrity of climate scientists.

Totally ethically bereft.  They don't even understand what being ethical means.

So this is some sort of mexican standoff with the Fed Govt is it?


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## mellifuous (8 December 2009)

Duped said:


> Ha ha.  What a classic.  So S&P are effectively saying that a second opinion would "create investor confusion and harm financial markets".  What a load of spin. That just demonstrates a lack of professionalism.  What about peer review?  Anyone know of another 'profession' that conducts itself in this manner?
> 
> And these are probably the worst of the individuals who are sitting back tutt tutting about the integrity of climate scientists.
> 
> ...




I don't know - but when I think of  how many good folks lost their money relying on ratings agencies, then I would say, 'good night and good luck' to those same agencies.

'AAA' rated toilet paper was the best we got.

soft and reassuring, and then; gurgle, gurgle gurgle: straight down the toilet.


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## demodocus (14 December 2009)

Duped said:


> They rely on our lack of detailed knowledge and then dress up these fringe products with credibility to trap us.




Perhaps we oldies could look for a berth somewhere in the Future Fund. Pay them a lump sum in return for an annuity or pension. We'd get the same return as the Public Servants, pretty good oversight, and minimal costs.


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## simgrund (21 December 2009)

demodocus said:


> Perhaps we oldies could look for a berth somewhere in the Future Fund. Pay them a lump sum in return for an annuity or pension. We'd get the same return as the Public Servants, pretty good oversight, and minimal costs.



Exactly as  per post 124 above and others before it.
Not a "Future Fund", but a separate product for "OLDIES".
Perhaps we could start work on its proposal next year???
Merry Christmas to all!!!


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## mellifuous (22 December 2009)

simgrund said:


> Exactly as  per post 124 above and others before it.
> Not a "Future Fund", but a separate product for "OLDIES".
> Perhaps we could start work on its proposal next year???
> Merry Christmas to all!!!




Merry xmas to all too....


http://www.youtube.com/watch?v=C1aguHjgd8g&feature=player_embedded


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## mini11 (26 December 2009)

I've been searching about the place for information on Astarra Funds Management and its related entities and was surprised the firm is now under investigation.

Is this a surprise to anyone?

Does anyone know why all this happened?


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## mellifuous (26 December 2009)

mini11 said:


> I've been searching about the place for information on Astarra Funds Management and its related entities and was surprised the firm is now under investigation.
> 
> Is this a surprise to anyone?
> 
> Does anyone know why all this happened?




http://www.watoday.com.au/business/asic-puts-urgent-stop-order-on-funds-20091020-h704.html

The audio on this link is interesting.


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## k.smith (29 December 2009)

mini11 said:


> I've been searching about the place for information on Astarra Funds Management and its related entities and was surprised the firm is now under investigation.
> 
> Is this a surprise to anyone?
> 
> Does anyone know why all this happened?





From the news today....

http://www.smh.com.au/business/trio-pleads-ignorance-on-118m-20091228-lhc6.html


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## k.smith (2 January 2010)

This comment is so true...
but what happens when something that should be disclosed isn't disclosed..?

http://www.theaustralian.com.au/bus...over-last-decade/story-e6frg8zx-1225813989559

"...Eslake says regulators had to work within the frameworks that were laid down by parliament. "I think what the latest financial crisis has exposed again . . . is the weaknesses inherent in the Australian approach to securities market regulation, which essentially relies overwhelmingly on disclosure," he says.

"What's happened with each successive piece of legislation, including the Financial Services Reform Act, is that the disclosure requirement has become more onerous but the information that is being disclosed as a result of that has been of no greater use and in some ways of diminishing use, because what it led to was product disclosure statements that were so large as to be almost incomprehensible to the average unsophisticated user."

ASIC commissioner Belinda Gibson says the regulator will be reviewing the adequacy of disclosure following a number of corporate failures during the crisis that exposed retail investors to significant losses: Storm Financial, Great Southern and Timbercorp...."


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## mini11 (5 January 2010)

Thanks for the posts and news links regarding Astarra.

I heard on the grapevine that the ASIC are sniffing around a few financial planners and their practices linked to Astarra.

What a disaster.


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## doctorj (5 January 2010)

mini11 said:


> I've been searching about the place for information on Astarra Funds Management and its related entities and was surprised the firm is now under investigation.
> 
> Is this a surprise to anyone?
> 
> Does anyone know why all this happened?



It was flagged by John Hempton of http://brontecapital.blogspot.com/ in a letter to ASIC after he tipped off journos who were unable to find enough evidence to publish anything at the time.  The blog tells the story quite well.


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## mellifuous (5 January 2010)

Taxation

Today I had an interesting conversation with an employee of ASIC.  I asked the employee why wasn't ASIC doing anything about members of various group encouraging member of the FMF to vote in support of distributions from the FMF.

I complained why didn't ASIC make the manager retract its statements about possible future distributions.

The employee said she wouldn't comment - I was disappointed.  I said (words to the effect of) "well, if I went to a bank and invested $1000, and then the bank lost $500, but in a week's time contacted me and said 'We've found $100 of the missing $500 but were going to pay you as interest', what would you expect would happen?'

I said (words to the effect of) that no one would accept that - getting one's own money back as an interest payment and having it taxable is just a nonsense.

I then said the FMF was like that and with all its debt, losses, and impairments, the fund would not be capable of deriving an income and so could not pay distributions.

She would not comment and said it was not a matter for ASIC.  I was stunned, if the payment of capital from a fund as distributions is not a matter for ASIC, then what was a matter for ASIC?

She suggested I phone the tax office.

I phoned the tax office and the officer told me that ASIC should have dealt with the issue.  The officer further advised me that there was nothing I could do until such a payment was made, and then I would be able to make a complaint to the ATO about the payment.  That was good news.

It was also good news that the ATO would accept a complaint from an investor if that investor believed that he/she had paid tax on distributions from a managed fund in the event that managed fund had done no more than return capital as distributions - that investor may be entitled to a tax refund.

It seems that today was a day of enlightenment, ASIC failed to act, but the ATO was ready to act - impressive thought - I'm not normally happy about the ATO but I confess I was today.

For whatever reason, completely isolated from my experiences, this afternoon the manager of the FMF issued this statement by email to a member of the FMF Coffee Club:-

"... Good afternoon Ian,

It is a delightfully short answer for you: We are acutely aware of the tax consequences of different types of potential “payments” (our preferred choice of word) to Unitholders and would seek professional advice regarding the best interests of Unitholders before proceeding with any payment. My further comments are that in its present form there  is no way I can see in the foreseeable future that the Fund could generate “accounting net income” which could be “distributable” to Unitholders and thus taxable in their hands. Conventional redemptions are not currently possible due to the $1 per unit fixed redemption price (stuff-up by CPL) in the Constitution. Hence any potential payment from the Fund to Unitholders would be in the character of a “return of capital”.

Regards, Rodger Bacon......"  (emphasis added)

If the manager wants to change the 'form' of the FMF, then let's see the meeting, and at that meeting it will be the manager that has to jump the 75% hurdle.

Even introducing a VUP will not allow for distributions, but the manager is free to dream as managers do.

We have been battling this issue for a long time - there have been far too many trading on the needs of investors by promising them something that cannot be delivered.

I live in sincere hope that there will be no more false promises about distributions from the FMF.

Damn those who live to deceive.

No thanks to ASIC - thanks to the ATO for giving me a backstop to my beliefs.


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## simgrund (6 January 2010)

mellifuous said:


> Taxation
> 
> Today I had an interesting conversation with an employee of ASIC.  ,,,,,,,,,,,,,,,,,,,,,
> I said (words to the effect of) that no one would accept that - getting one's own money back as an interest payment and having it taxable is just a nonsense.,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
> No thanks to ASIC - thanks to the ATO for giving me a backstop to my beliefs.




So right Allan. I am hoping to claw back tax paid so far on ghost distributions. Let's keep up this channel of real help.
Regards,


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## mellifuous (8 January 2010)

I have an idea ---

The following overcomes one of the drawbacks for investors, the lack of cohesion amongst investors in their respective managed funds (listed and unlisted).

The fact that the manager is organised and focused always puts the manager at a distinct advantage over individual investors.

In order to bring some degree of balance between respective powers, I suggest the following:-

When a managed fund is created, a necessary step in the process is to establish a website (be it the manager's website or elsewhere) with a forum, or alternatively with Yahoo Forums.

The website forum should be moderated by democratically elected members of the fund.

Leadership should be democratically elected from within the forum, with guidelines published for 
elections, time frames, etc.  It should not be _ad hoc_.

As each member invests in the fund (scheme), the manager should be compelled to provide that member with a username and password for access to the forum.

There should also be some mechanism for the forum to handle postal communincations to and from members who do not have access to a computer.

I believe that no one should be banned (but postings should necessarily be moderated), and it should be illegal for anyone to join the forum who is not a member of that managed fund.

Any comments?


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## demodocus (9 January 2010)

mellifuous said:


> I have an idea ---
> 
> I believe that no one should be banned (but postings should necessarily be moderated), and it should be illegal for anyone to join the forum who is not a member of that managed fund.[/COLOR]
> 
> Any comments?




Rather than being illegal for "anyone to join the forum" I'd suggest "anyone to post to the forum" in this way potential investors can be warned of [potential] conflicts within the fund.


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## mellifuous (9 January 2010)

demodocus said:


> Rather than being illegal for "anyone to join the forum" I'd suggest "anyone to post to the forum" in this way potential investors can be warned of [potential] conflicts within the fund.




Yes, you're right.

I'm making a suggestion to ASIC about his point.

I think that investors in managed funds are not as savvy as investors in the stock market and therefore need a place of reference for information and peer support.


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## k.smith (27 January 2010)

This article exposes the dilemma that is now eating into the life savings of many investors in property trusts...

http://www.smh.com.au/business/real...y-train-of-management-fees-20100126-mwc8.html

Real estate investment trusts a gravy train of management fees January 27, 2010 
Two recent inquiries have ignored problems with the structure, writes David Nunnerley. 

The failures and disappointments of listed property or real estate investment trusts over the past two years have revealed shortcomings in their management fee structures.

The investment trusts represent a big investment sector but were clearly not on the radar of the Joint Parliamentary Inquiry into Financial Products and Services, chaired by Bernie Ripoll, or the Productivity Commission inquiry into executive remuneration.

The trusts are very different from corporations. The management fees in effect replace directors' fees,

which create real or perceived conflicts of interest between managers and investors.

Almost without exception, real estate investment trusts are marketed on the basis that management will use its skill in selecting properties for future acquisitions, lowering investment risk and providing growth. The motivation of the promoters and managers of the trust is presumably to build recurring management fees, as well as the capital value of the management business, which is determined by the value of funds under management.

This strategy creates an inherent conflict of interest. Adding to the size of the property investment portfolio may result in a dilution or slowing of the income generation of the property portfolio of the particular trust .

Besides any inherent conflict, some of the trust management fees are simply excessive. The detailed fee structures of the trusts vary, but operational and management costs are similar.

Operational costs covers the management of the individual properties - letting agents' fees, supervision of property maintenance, agents' payments of direct property expenses, property insurance, preparation of monthly income and expense statements, etc. These expenses are usually charged directly against the property income of the properties concerned to arrive at net property income. Management costs essentially comprise the cost of the administration of the real estate investment trust and typically include accounting, audit fees, preparation of management and unit holder reports, office costs, cost of compliance, legal fees, etc.

On top of these costs, a management fee is payable to the manager, usually expressed as a percentage calculated on the gross asset value of the trusts. These fees are recurring and represent fees for directing the trust involving strategy, review of budgets, instructing property managing agents, approving unit holder reports, etc. The costs incurred by the manager for providing these services would be only a small fraction of the fee.

It is this management fee, based on a percentage of the gross value of the trust assets, that provides a secure recurring cash flow for the manager. In some cases management fees are increased by incentive-related fees linked to index performance.

Some trusts also charge fees of up to 2.5 per cent on the value of any properties acquired, on the value of property sold and on the amount of loans raised. These fees can be severe, are usually capitalised to the value of the property assets acquired and typically not presented as costs in income statements.

Corporations law provides for replacement of trust managers. However, there are a number of trusts where the manager has been able to entrench its position with management contracts for up to 20 years. It is difficult to understand how such contracts can be considered to be in the investors' interest. Real estate trust management contracts are valuable assets, essentially developed at the expense of the investor.

At what level fees become excessive is a matter of subjective judgment. Payment of fair fees is expected to allow for the administration of the properties and the trust, but management fees that could be regarded as directors' fees are questionable and are conducive to exploitation.

Management fees are payable whether the trust makes a profit or a loss. A far more equitable arrangement would be for management contracts to be subject to periodic approval by unit holder resolution, rather like company director appointments. After all, the manager is a contractor, and many others would be willing to take on the job.

For this to happen, annual general meetings - no longer a requirement for the trusts - would need to be compulsory so unit holders would have a forum to question the performance of the manager. The Joint Parliamentary Inquiry into Financial Products and Services recommended that Australian corporations legislation be amended to state that financial planners hold a fiduciary duty to put the interests of their clients first.

For real estate investment trusts, the corporations legislation already includes similar provisions dealing with conflicts of interest between officers of the responsible entity on the one side and investor interests on the other.

Nonetheless, one cannot help questioning the effectiveness of

the legislation and the trusts' governance procedures.

David Nunnerley is an accountant.


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