# I have this friend



## darkside (22 July 2009)

Ok, this isn't about me, but the story starts that i have this friend who has an accountant that looks after all her affairs since she separated from her husband.The accnt looks after her finances and managers her share portfolio , so she doesn't have to do anything, as she is not at all wise to it .

She owns around 1500 RIO shares, when she went to do her tax she asked about the RIO share offer and what he had done about it, he said he had mailed her all the details including his reccomendations, when he went to her file to show her he pulled out the original including the unsent letter "DOH"
He didn't send it.

Roughly how much has this cost her, she had enough coin to take the full offer and probably would have,  sentimental RIO owner,  what should she do.  


And sorry if i posted this in the wrong spot


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## awg (22 July 2009)

darkside said:


> Roughly how much has this cost her, she had enough coin to take the full offer and probably would have,  sentimental RIO owner,  what should she do.





I can help deliver some good news I think.

If you go the RIO thread on this forum, you will find a post that outlines the exact question you are asking, basically it explains that the RIO capital raising, is very fair, unlike AIO etc, and this is due to dual listing requirement and regulations with regard to its UK listing.

In this post, I recall it details exactly how people who dont take part are compensated.

I cant remember exactly, as it was a exact technical explanation, and I took up the offer, so did not need to fully digest the answer.

Just look in the RIO thread around the date of the offer, shouldnt be too hard to find


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## darkside (22 July 2009)

Cheers AWG, thanks muchly, she would have taken up the offer had she have known about it, and it wasn't her job to stay informed, she pays him a squillion and a half dollars to be on top of it all for her. 
Now she feels like she dipped out big time.


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## trainspotter (22 July 2009)

So basically the accountant has advised the client that the documentation "Is in the mail" ... Once discovered that the originals were still in the file the transparency has somehow evaporated? Providing documentation trail can be proved by date matrix the following will happen:

1) Accountant wil blame a previous staff member of guilt of non posting.
2) Accountant will offer some lame excuse that staff member was not at fault and then offer a "free" consultation.
3) Accountant will then blame "harsh economic times" because he had no staff to post documentation.
*4) It is all your "friends" fault for not following up earlier on Rio shares * MOST LIKELY OUTLOOK !!!!!
5) Recomendations by accountant were NOT to take up Rio options (Small falsifacation of documentation)
6) Accountant goes on holiday to RIO and does not come back.

In all honesty ALL accountants have PUBLIC INDEMNITY INSURANCE. Your "friend" should ask to see the required insurance. AND politely ask the accountant to pay the difference between the offer and the day of discovery on the quiet or get the lawyer involved to take on the PII.

ON THE OTEHR HAND. 

The accountant will:

1) Accountant will advise his solicitor that "friend" had no intention of taking up option and could not afford to do so.
2) "Originals" were kept in file and "copies" WERE sent to "friend" who lost them.
3) "Originals" were kept in file and "copies" WERE sent to "friend" and AUSTRALIA POST lost them.
4) Accountant will request "friend" to prove financial hardship along the lines of "So you got these shares and my advice would have been to but them into TTY (Territory Ore) and as they are suspended and no likelihood of profit then I have done you a favour"
5) Accountant goes to Rio and does not come back.
6) Your "friend is in a world of pain"

Hopes this clears it up for you darkside. BY NO MEANS IS THIS ADVICE.

Only what has happened to me in the past.


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## Aussiest (22 July 2009)

trainspotter said:


> In all honesty ALL accountants have PUBLIC INDEMNITY INSURANCE. Your "friend" should ask to see the required insurance. AND politely ask the accountant to pay the difference between the offer and the day of discovery on the quiet or get the lawyer involved to take on the PII.




I would advise that your friend look into the compensation for not taking the offering, and to do what trainspotter suggested - to threaten the broker with legal action, especially if there is a paper or emaill trail. Sounds like professional negligence to me.


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## Krusty the Klown (23 July 2009)

Another thing to look for is if the accountant is RG146 compliant, ie it is illegal for an acccountant to give financial recommendations regarding shares unless they operate under an Australian Financial Services License.

If the accountant does not have one, then you can pursue civil and criminal compensation. Plus the accountant will be charged with a criminal offence.


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## Knobby22 (23 July 2009)

It was obviously an honest mistake.

Forgive the accountant. 

Life's too short to go all nasty.


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## jono1887 (24 July 2009)

Knobby22 said:


> It was obviously an honest mistake.
> 
> Forgive the accountant.
> 
> Life's too short to go all nasty.




Would you if it was you that was affected?? The accountant is being paid to look after her shares ect ect and failed to do so... so he should be accountable for this.


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## kincella (24 July 2009)

as usual I am  the odd one out.....how about taking some responsibility yourself....a quick check...yes I have Rio shares, a quick call to my accountant, to check that I will be taking up the offer, confirmation that I have signed the document, and paid the money and sent it off in time.....
I cannot believe the people, who hand total  responsibilty to another, and then complain when something goes wrong.....
sounds like a storm client....
tell your friend that he/she needs to keep an interest in what is in the portfolio, and when there is a rights issue or anything in the news that could affect the portfolio...to keep in touch with the person responsible....to make sure whatever it is happens.... 
each and everyone of us has the same amount of hours in a day....
so no one is busier than another...or does not have time to attend to whatever....
lesson learned   ??...maybe....do not trust or risk everything with one person, take responsibility for things yourself...everyone of us is fallible, at some time


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## awg (24 July 2009)

darkside said:


> Cheers AWG, thanks muchly, she would have taken up the offer had she have known about it, and it wasn't her job to stay informed, she pays him a squillion and a half dollars to be on top of it all for her.
> Now she feels like she dipped out big time.





I was reading the RIO thread the other day, to keep myself updated on the IO situation, and I checked for the post I mentioned, but I couldnt see it

So perhaps it was on another thread, or even across the road!

I would take the approach that I normally do when a long time business associate and myself cost each other money due to some human error;

that is negotiate for them to do the next job at a discount

so instead of charging a "squillion and a half", maybe just a squillion for the next return.

The approx cost atm would be about 1500 x ($58-28) x 42/21 = $22,500

christ, that is a lot


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## darkside (25 July 2009)

kincella said:


> as usual I am  the odd one out.....how about taking some responsibility yourself....a quick check...yes I have Rio shares, a quick call to my accountant, to check that I will be taking up the offer, confirmation that I have signed the document, and paid the money and sent it off in time.....
> I cannot believe the people, who hand total  responsibilty to another, and then complain when something goes wrong.....
> sounds like a storm client....
> tell your friend that he/she needs to keep an interest in what is in the portfolio, and when there is a rights issue or anything in the news that could affect the portfolio...to keep in touch with the person responsible....to make sure whatever it is happens....
> ...




Kincella, i see your point , but as i stated, when it comes to her finances she is as dumb as a post, so she pays an acct big dollars to look after everything, from buying cars to managing school fees, she is a "ditz" thats a given, she owns a dog, but she doesn't bark at the people walking up the road, thats the dogs job.

The accountant, knows he is responsible, he even apologised for not checking that he had mailed her the details, so i think she should be entitled to some form of compensation for his negligence.

I own a car, i have never looked under the bonnet, would not know how to, and why should i , my mechanic is payed good money to be responsilble for it, if something was to go wrong with it, i would be dissapointed in someone for suggesting that i take repsonsibilty for it and not try and shirk the blame, the same goes with my boat.


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## CapnBirdseye (25 July 2009)

Knobby22 said:


> It was obviously an honest mistake.
> 
> Forgive the accountant.
> 
> Life's too short to go all nasty.




I'm inclined to agree.  We all make mistakes.  Life is too short to get too upset about everything.

But, I'd make my displeasure known and I'd either wan't my fees waived for a year or take my business elsewhere.

That is if it's a one off mistake and the service he usually provides is good.  If this is one of many other such mistakes - well thats another matter.


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## darkside (25 July 2009)

CapnBirdseye said:


> I'm inclined to agree.  We all make mistakes.  Life is too short to get too upset about everything.
> 
> But, I'd make my displeasure known and I'd either wan't my fees waived for a year or take my business elsewhere.
> 
> That is if it's a one off mistake and the service he usually provides is good.  If this is one of many other such mistakes - well thats another matter.




Good advice, up untill now he has been great, it's a pity this  *^c$up was a costly one for her.
But yes she should try and negotiate some sort of  fee waiver for a big mistake he made, lets face it, if i was in his shoes , i would want to be seen to make it right.


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## Knobby22 (26 July 2009)

CapnBirdseye said:


> I'm inclined to agree.  We all make mistakes.  Life is too short to get too upset about everything.
> 
> But, I'd make my displeasure known and I'd either wan't my fees waived for a year or take my business elsewhere.
> 
> That is if it's a one off mistake and the service he usually provides is good.  If this is one of many other such mistakes - well thats another matter.




Good idea.


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## Aussiest (26 July 2009)

CapnBirdseye said:


> We all make mistakes.  Life is too short to get too upset about everything.




Ouch, i'd agree if it was a personal situation, but business is business. An accountant gets fees for offering professional advice (if that's the deal that you've struck), therefore they should be liable if they mess up.

I would demand the cash difference between not taking up the offer and taking up the offer, if i had instructed him / her to take some action. Any instruction from a client should be considered a contract and therefore the accountant should be liable.


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## beamstas (26 July 2009)

Aussiest said:


> I would demand the cash difference between not taking up the offer and taking up the offer, if i had instructed him / her to take some action. Any instruction from a client should be considered a contract and therefore the accountant should be liable.




There was no advice given


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## Aussiest (26 July 2009)

darkside said:


> i have this friend who has an accountant that looks after all her affairs since she separated from her husband.The accnt looks after her finances and managers her share portfolio , so she doesn't have to do anything
> 
> She owns around 1500 RIO shares, when she went to do her tax she asked about the RIO share offer and what he had done about it
> 
> ...




She employs him to handle her affairs and make recommendations. He forgot to send the letter. He should be liable!


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## Calliope (26 July 2009)

darkside said:


> I own a car, i have never looked under the bonnet, would not know how to, and why should i , my mechanic is payed good money to be responsilble for it, if something was to go wrong with it, i would be dissapointed in someone for suggesting that i take repsonsibilty for it and not try and shirk the blame, the same goes with my boat.




Bad analogy. The mechanic is not responsible for the condition of your car no matter how much you pay him. The mechanic would have spotted you for a sucker, and will do the barest minimum to keep your car running and sign your log book to say he has done the full service.


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## trainspotter (26 July 2009)

Beamstas ... original post said "She owns around 1500 RIO shares, when she went to do her tax she asked about the RIO share offer and what he had done about it, he said he had mailed her all the details including his reccomendations, when he went to her file to show her he pulled out the original including the unsent letter "DOH" He didn't send it."

I guess this is where he conundrum lies. What were his recomendations? Even if he did recommend the RIO options would she have taken it up? Very grey area. Seek legal advice if it was me. Apparently the amount is $22,500 in total of discrepancy. Such is life.


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## trainspotter (26 July 2009)

Calliope said:


> Bad analogy. The mechanic is not responsible for the condition of your car no matter how much you pay him. The mechanic would have spotted you for a sucker, and will do the barest minimum to keep your car running and sign your log book to say he has done the full service.




If the mechanic has signed the log book and has not performed the service as per specifications listed in the Log Book he is liable. Had a case myself like this. 20,000 km service on car. Check the tower struts (holds the springs and the suspension in place) part of the spec service. Apparently the apprentice stripped the nuts on the top tower. Car had major meltdown in driveway. Basically the front assembly collapsed. They responsible alright !! If a car engine blows up because engine oil not changed at service, tests can determine how old the oil is as well.


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## Calliope (26 July 2009)

trainspotter said:


> If the mechanic has signed the log book and has not performed the service as per specifications listed in the Log Book he is liable.




Yeah. He may be liable, proving it is another kettle of fish. Not all drivers are as smart as you.


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## awg (26 July 2009)

beamstas said:


> There was no advice given






Calliope said:


> Yeah. He may be liable, proving it is another kettle of fish. Not all drivers are as smart as you.





One issue that is not 100% clear, is was the accountant the registered address for the Share correspondence?..presumably was?

If he was, and simply neglected to forward the info to the holder, and this is not in question, I would probably be approaching them, as this seems a fairly clear cut case, and possibly Professional Indemnity Insurance may cover such matters.

20k plus is more than I would be prepared to ignore.

The issue of advice is a separate matter, he may hold the appropriate license


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## darkside (28 July 2009)

She has a meeting tomorrow with the accountant, so will advise of the outcome.


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## Prospector (28 July 2009)

kincella said:


> I cannot believe the people, who hand total  responsibilty to another, and then complain when something goes wrong.....
> sounds like a storm client....




I totally disagree.  If you have made the decision to hand over all responsibility to another qualified person (not something I would do though), then you also pay them for that responsibility.  And it us up to them to follow through.  Not you!


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## kincella (28 July 2009)

well the storm people paid 8% commission, so we are talking about a lot of money, for someone else to look after your interests...like 80,000 pa for a million dollar investment, or 40,000 pa for a half mill....that is seriously big money to be handing over to another to look after your interests
and look where they are now....
whether you agree with me or not...its people like this that take no responsibility who end up losing their money.....
find a good broker to help, then have another professional (maybe the accountant) to give a 2nd opinion....make sure they are not working together....
Most of the  wealthy people I know who are good at running a business,or even just salaried people, but not good at investing, have at least 2-3 other professionals, to discuss any ideas with, before making decisions....and it works for them...they would not put all their eggs in one basket ie; giving sole authority to one person.....
anyway...will this be a lesson for the future or not, for the friend


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## Krusty the Klown (28 July 2009)

kincella said:


> find a good broker to help, then have another professional (maybe the accountant) to give a 2nd opinion....make sure they are not working together....
> 
> Most of the  wealthy people I know who are good at running a business,or even just salaried people, but not good at investing, have at least 2-3 other professionals, to discuss any ideas with, before making decisions....and it works for them...they would not put all their eggs in one basket




I agree, particularly the larger the amounts you are dealing with. Good way to flag potential losses from incompetence as well as less than ethical types.

A second opinion could be thought of as due diligence.


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## nathanblack (28 July 2009)

i thought if you chose not to take up the rights issue you could sell the rights. maybe the accountant has sold them for himself? if he sold them on her behalf he would have said. he has nothing to gain by doing nothing

i thought if you didnt take up the offer, the rights were allocated to the instos and the holder got paid according to the auction price the insto paid for excess rights?

in which case she will get a cheque for about $28 per right, and she was entitled to X rights.


could be wrong though


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## awg (28 July 2009)

nathanblack said:


> i thought if you chose not to take up the rights issue you could sell the rights. maybe the accountant has sold them for himself? if he sold them on her behalf he would have said. he has nothing to gain by doing nothing
> 
> i thought if you didnt take up the offer, the rights were allocated to the instos and the holder got paid according to the auction price the insto paid for excess rights?
> 
> ...





I am sure I read something similar, as I said in my first post, but couldnt find the detail.

Under the circumstances, probably the best thing to do would be ring the Share Registry, and ask them to explain how it works, would be better than speculating incorrectly, as I myself may have done in a subsequent post, and having a tantrum with the accountant ( although you would expect him to know, if he is being paid to manage clients financial affairs)


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## darkside (28 July 2009)

Calliope said:


> Bad analogy. The mechanic is not responsible for the condition of your car no matter how much you pay him. The mechanic would have spotted you for a sucker, and will do the barest minimum to keep your car running and sign your log book to say he has done the full service.




Maybe thats how your mechanic works? (you should find another one if thats the case)  or perhaps your stereotyping motor mechanics in general ( hope no mechanics read this forum) or you just know something about my mechanic that i don't (if thats how it is PM me) 
 Our mechanic looks after all 3 of our cars, he has done for the past 12 years, in that time we have not ever had a problem with any of the cars , not a flat battery,  oil leak , anything. 

I don't believe i am a sucker for trusting someone to look after something that i don't have the slightest amount of interest in , he even chooses the new cars for us every 3 years as i know nothing about them , and don't really want to.

Maybe you have the time or the inclination to know your motor cars more intimately than i do, but untill that time i will have to hand over that responsibility to someone more qualified and way more interested than me.


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## Prospector (28 July 2009)

Thinking some more about this, the situation is no different from trusting a surgeon to operate. Most of us know nothing about medicine so we have to place our trust in the medical profession. If they omitted to do something and as a result there was a mishap then we might expect to do something about that depending on the impact. 

This friend knew little about shares and had nominated the accountant tone the communicator. He didn't. Why is it any different?


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## darkside (30 July 2009)

Ok, she went to the accountant, expecting an apology and maybe some free financial work for the rest of the year and all would be good. 

He apologised profusly, said he has cost her a lot of money, took full responsibility and gave her $15000.00 cash , and will do her financials for the next 2 years gratis. 

She is rapt, mind you it's not like she needed the money, but i suppose thats not the point.

At the end of the day, he keeps a wealthy client who won't bad mouth him to her friends ,  she has some extra coin, and free financial work and odds are , it's a valuable lesson that he will never forget. Great result.


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## awg (30 July 2009)

darkside said:


> Ok, she went to the accountant, expecting an apology and maybe some free financial work for the rest of the year and all would be good.
> 
> He apologised profusly, said he has cost her a lot of money, took full responsibility and gave her $15000.00 cash , and will do her financials for the next 2 years gratis.
> 
> ...






whats she gonna do if RIO send her a cheque for $28 x 1500?


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## trainspotter (30 July 2009)

Happy Days darkside. Love to hear a win for the "A" team every now and again !


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## darkside (30 July 2009)

awg said:


> whats she gonna do if RIO send her a cheque for $28 x 1500?




I'm not sure about that one, but at a guess, "SPEND IT"


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## darkside (30 July 2009)

trainspotter said:


> Happy Days darkside. Love to hear a win for the "A" team every now and again !




Thank you, and yes she was stoked, and obviously the accountant feels a lot better and can probably sleep easier knowing he did the right thing.


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