Wellington Capital PIF/Octaviar (MFS) PIF

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

Hi,

We're all on a learning curve here, so E & OE.

Since there are investors whose interests fall between two stools, the FMF and PIF, we all tend to become more and more aware of each other's situations.

I'm aware that J.H. has an 'out' clause built into your fund's constitution and that a change of manager is not so easy to do as to say. However, I have noted that investors in the PIF seem somewhat demoralised by the low price of units on the NSX.

Since transactions are few, it doesn't seem to make sense to me that the listing persists because there simply no good reason to do so, especially when balanced against the depression that seems to set in as a result of the low prices.

It also seems to me that there is no motivation for a manager (in the FMF and the PIF) to sell down assets, because that in turn reduces the FUM, and thereby the fees, or in the case of the PIF, the value of the 'out' clause.

No, Trilogy have not answered as to whether they're taking 'direct' fees, and some of us have formed opinions as to the reality of what they are doing. I would have thought it an easy question to answer, 'yes' or 'no'.

There isn't too much participation from investors in the FMF and this makes things difficult to effect change.

That's why I suggested that you ask your manager about these 'direct' fees - I have no idea whether or not W.C. takes these fees, but if they do, then they're coming out of investors pockets in circumstances whereby the lenders are unable to repay loans to the PIF.

The trouble is that managers tend to talk about 'management fees' and leave out all other fees. A good example of this is Trilogy's run for the FMF, neither City nor Trilogy spoke to 'direct' fees.

I mentioned them in my submission to the senate inquiry - 182a.

We continue to learn.

By the way, I have met Justice McMurdo and he's a very astute man. Very talented and fair minded.

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

This prescient article appeared in the Australian just a year ago. As I recall, some PIF investors were angered by it and criticised its author.

http://www.asa.asn.au/ShareholderOpinion.asp?ID=SO186.xml

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

I should add (as I see your case no different from the FMF):-

I believe that fund managers benefit from a listed fund because they have the whole pool of money invested in the fund to themselves without the need to repay one penny of it (so to speak). Investors have to go to the market, which in the case of the PIF, has been abysmal for investors.

Further, I think that investors are substantially disadvantaged by the fact that there is no direct link between the 'true' value of the funds assets and the market value of their shares/units. I think it's human nature to always seek a discount when there is no need to pay full price, and if the seller is desperate, then the price will naturally be reduced.

Investors will get the best price by realising the assets by sale (wind up). The time to sell is always the critical issue and something that needs to be thought through carefully. Nevertheless, the value is in the assets, not in the NSX units/shares.

To my mind, that's the prime motivator to go and de-list, others will see it differently. As in all funds, the managers have potential to make a lot of money from a lot of different things - court cases, do this, do that - so, adding up ALL the fees (when you know them), auditors fees, maintenance on property, legal fees, and custodian fees will give investors a good idea of the expenses of the fund in order whether to persist with the fund.

J.H. has an 'out' clause but as I understand it, it's triggered by 'over throwing' her, not by winding up the fund. Maybe it might be worthwhile seeking some legal advice about that one.

Whether you have to de-list and then windup, or whether you can simply de-list or windup, I don't know.

I just think listing is not terminal - rather a place to learn and make decisions about the next steps.

However, if apathy sets in, then listing will be terminal.

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

The case continues again tomorrow in the Supreme Court - not sure if WC is a party?

RE: OCTAVIAR LIMITED (FORMERLY MFS LIMITED)
Justice Philip McMurdo
Banco Court
Floor 2
2:00 PM
(Hearing Part Heard)

RE: OCTAVIAR ADMINISTRATION PTY LTD
Justice Philip McMurdo
Banco Court
Floor 2
2:00 PM
(Hearing Part Heard)

RE: OCTAVIAR ADMINISTRATION PTY LTD
Justice Philip McMurdo
Banco Court
Floor 2
2:00 PM
(Hearing Part Heard)

 

[Mary Lynch]

Re: Octaviar MFS Premium Income Fund PIF

A great many of you have warmed my heart with your knowledge and energy, not to mention time given to getting the class action up and going.
However, having sold my shares, and continued to read your posts, my heart is bleeding for you....as in my now objective position, it would seem that it is possible that many of you are blinded by hope!

From where I am sitting, there is NO DOUBT WHATSOEVER that JH has one person's interests at heart, and that person is NO different to any other fatcat's no.1....let me leave you to guess who that is!

The problem is...who is going to be any different; they are all vultures.

In another "vein"..Why would JH be delaying the proceedings for the class action, if she wasn't covering her own ass in some way? There has been some wheeler-dealing going on...just mark my words...and she's up to her ears in it! She needs to be made to come clean with some cold hard truths....and unfortunately, because all of you have a vested current interest in the fund, you are walking on thin ice when you confront her...a very difficult position...however it should not be insurpassable....you need someone with real guts to take that woman on...oh yes!!!

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

A great many of you have warmed my heart with your knowledge and energy, not to mention time given to getting the class action up and going.
However, having sold my shares, and continued to read your posts, my heart is bleeding for you....as in my now objective position, it would seem that it is possible that many of you are blinded by hope!

From where I am sitting, there is NO DOUBT WHATSOEVER that JH has one person's interests at heart, and that person is NO different to any other fatcat's no.1....let me leave you to guess who that is!

The problem is...who is going to be any different; they are all vultures.

In another "vein"..Why would JH be delaying the proceedings for the class action, if she wasn't covering her own ass in some way? There has been some wheeler-dealing going on...just mark my words...and she's up to her ears in it! She needs to be made to come clean with some cold hard truths....and unfortunately, because all of you have a vested current interest in the fund, you are walking on thin ice when you confront her...a very difficult position...however it should not be insurpassable....you need someone with real guts to take that woman on...oh yes!!!

Some exerpts from the SMH.....

http://www.smh.com.au/news/business...d-to-redemption/2009/09/02/1251570744233.html

...While investors in mortgage trusts are enjoying the benefit of a concerted effort by the investment management industry and the corporate watchdog to get liquidity back into their funds and get redemption payments back on track, investors in most unlisted property trusts remain in limbo, with no idea when they will see their money.....

No investor puts their money into a unit trust expecting that it could take years to get it back.

Mortgage trust managers appear to have taken this commitment a lot more seriously. Recognising that investors in mortgage trusts treat them as a form of at-call cash fund, they have worked through the industry body, the Investment and Financial Services Association (IFSA), to lobby the Government to use a bit of stimulus money to put liquidity into the funds.

Asked whether property fund managers had taken action along similar lines, the chief executive of IFSA, Richard Gilbert, says: "They have not approached us."........

I wonder why not?
I agree with you, Mary...and the reality is the way that these funds are able to operate leaves the investor....that's us!...in the dark. There seems to me to be an area of "hallowed ground" for these fund managers, where relevant questions asked by unitholders are not answered, where they can say one thing one day and renege on it the next, where our "right to receive distributions proportionate to the unitholding in the fund"(pg. 67 WPIF Explanatory Memorandum) has disappeared, where unitholders bear all the disadvantages of the NSX listing as they are forced to trade in a market that does not reflect the NTA value of their units.....

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

How much time can the properties sit on the market unsold before WC have to begin writing them down?

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

There are so many people out there affected by what has happened ...
http://www.businessspectator.com.au...zes-redemptions-pd20090826-VAA69?OpenDocument

One of Australia’s most historically successful balanced superannuation funds has taken the unusual step of freezing redemptions, after reporting a drop of 16.8 per cent in the year to June, below the average 13 per cent decline for balanced funds over the period.

Until recently a top five fund, the New South Wales Bookmakers Superannuation Fund (BSF) reported its first loss last financial year, hurt by its holding in collapsed investment bank MFS, related investment in the MFS Premium Income Fund, and other investments in the City Pacific Cash Funds.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

These are the hearings that were foreshadowed in the WC Update - the PTQ is seeking to have Deloitts removed as liquidators and provisional liquidators for these Octaviar entities.

COMMERCIAL LIST
RE: OCTAVIAR LIMITED (FORMERLY MFS LIMITED)
Justice Philip McMurdo
Banco Court
Floor 2
9:30 AM
(Hearing)

RE: OCTAVIAR ADMINISTRATION PTY LTD
Justice Philip McMurdo
Banco Court
Floor 2
9:30 AM
(Hearing)

RE: OCTAVIAR ADMINISTRATION PTY LTD
Justice Philip McMurdo
Banco Court
Floor 2
9:30 AM
(Hearing)

And if PTQ win then their legal costs will be paid for out of the remaining OCV cash. If Deloitte fight PTQ then they're costing us even more money.

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

The latest AG news update revealed to members numbers indicating how many investors have signed up for the class action. It seems that IMF are very pleased with the final figure. To a layman, there still seem to be an awful lot who declined the offer. Isn't it the case that these reluctant invitees now run the risk of missing out on what could be many thousands of dollars? I wonder what prompted them to decline participation. Any ideas, anyone?

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

Selciper, based on the investor figures I posted earlier, my estimate is that 4,200 represents around 80-90% of the funds capital. Those that have not responded are likely to be in the lower investment range $5K to $20K - and they have probably written off their investment.

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

This afternoon I had a look at the PIF Port Macquarie project highlighted in the latest WC update. The new builder is already on site and here is a link to his details http://qldpropertydevelopers.com/pdf/Capability_Statement.pdf. In the interests of full disclosure you would think that JH would have given at least some detail.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Another interesting media article which I consider relevant to our own Class Action, Regards, Seamisty ; ;http://www.wabusinessnews.com.au/en-story/1/75052/EY-settles-Sons-of-Gwalia-claim-at-125m
EY settles Sons of Gwalia claim at $125m
The long-running saga of the Sons of Gwalia collapse has reached another milestone with the former mining company's auditor Ernst & Young agreeing to pay $125 million.

If approved by creditors, the sum will add to $3 million to be paid by former directors and $50 million agreed to be paid by their insurers.

Provided creditors accept the deal struck between EY and SoG administrators, Garry Trevor, Andrew Love and Darren Weaver, the accounting firm will become the biggest contributor to creditors, usurping American International Group, the giant insurer rescued by US taxpayers last September.

AIG will contribute $30 million and the balance of the insurance contribution is coming from two Lloyd's syndicates.

About $20 million of that was to be available to fund the directors' legal defence.

The four directors to contribute directly - company founders Peter and Chris Lalor, finance director Eardley Ross-Adjie and audit committee chairman Thomas Lang - will contribute $3 million without any admissions.

Tantalum and gold miner SoG colllapsed in 2005 under the weight of its own hedge book owing about $800 million.

That amount grew substantially when some shareholders won the right in the High Court to considered as creditors.

Litigation funder IMF Australia says it will receive $18 million in revenue if the settlement with EY is approved.




Below are releases from EY, Ferriers and litigation funder IMF:

Ernst & Young Australia today announced that it had settled, subject to creditor approval, the
Sons of Gwalia proceedings.
Ernst & Young has been vigorously defending claims made against it by the Administrators for
Sons of Gwalia, since 2005.
The parties entered into mediation in August 2009.
The proposed settlement is for an amount of A$125 million, including interest and costs. In
settling, there were no admissions of any liability by any of the parties.
In announcing the settlement Mr Gerard Dalbosco, Oceania Managing Partner and Chief
Executive Officer, Ernst & Young Australia said: "The decision to settle is a commercial one
and after four years of litigation we want to bring this matter to a close."
"By settling this matter we will be able to put it behind us. The firm remains financially strong
and we are continuing to, invest in and, grow our business," said Mr Dalbosco.
"It is important that due process is respected. The Administrator will now seek creditor approval
for the proposed settlement in a meeting on 23 September 2009", said Mr Dalbosco.



Ferrier Hodgson Partners Garry Trevor, Andrew Love and Darren Weaver announced today
that they have reached a settlement with Ernst & Young and the Shareholders that will
result in $125m being payable to Sons of Gwalia Limited - subject only to creditor approval
at a meeting to be held on 23 September 2009.
Mr Trevor said: "This settlement together with the previous settlement of $53 million, made
with the directors and their insurers, will add $178 million to the asset pool which will allow
for a significant dividend to be paid by December 2009 and will assist in bringing this longrunning
administration to a close."
"The decision that the settlement was in the best interests of creditors was made in
consultation with our legal team and the Creditors Committee and after consideration of a
range of legal and commercial issues."
A report to creditors that recommends creditors of Sons of Gwalia approve the terms of the
settlement is to be posted to creditors on 8 September 2009. Notices of meetings will be
provided on the same day by advertisements in the West Australian and Australian
newspapers.
Should creditors resolve to approve the terms of the settlement, the Administrators confirm
that they will be in a position to declare and pay a dividend by the end of 2009.



1. The Board of Directors of IMF (Australia) Ltd ("IMF") is pleased to announce the conditional
settlement of litigation against the auditors of Sons of Gwalia Ltd (Subject to a Scheme of
Arrangement and Deed of Company Arrangement) ("SOG") by SOG itself and by
shareholders of SOG by way of a class action.
2. The conditional settlement is subject only to the approval of the creditors of SOG. The
Administrators' have set the meeting of creditors to be held on 23 September 2009.
3. IMF will recommend the settlement to creditors and expects that they will give their approval.
4. If the conditional settlement is approved by creditors, IMF expects to receive revenue of
approximately $18M from the total dividend to be paid by SOG and generate a profit after
capitalised overheads of approximately $17M (before tax).
5. IMF advises this was the confidential settlement announced on 24 August 2009.

 

[To Trusting]

Re: Octaviar MFS Premium Income Fund PIF

I thought you might also like to see this newspaper article from NZ:

stuff.co.nz/business/2778374/Michaels-Elysian-Fields-Fit-for-a-king (sorry you will need to add the w's as the forum will not allow me to add a llink)

Thank you for all of your posts. We have learnt so much from this forum.

FYI - we have joined the class action, although still not sure if it is the right thing to do?????

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

I thought you might also like to see this newspaper article from NZ:

stuff.co.nz/business/2778374/Michaels-Elysian-Fields-Fit-for-a-king (sorry you will need to add the w's as the forum will not allow me to add a llink)

Thank you for all of your posts. We have learnt so much from this forum.

FYI - we have joined the class action, although still not sure if it is the right thing to do?????

Welcome to the forum 'To Trusting', my unqualified opinion is that you have nothing to lose by participating in the PIF CLASS ACTION. I think any negative costs is the responsibility of IMF ( or at least I hope so !! ) Regards, Seamisty

 

[gardie]

Re: Octaviar MFS Premium Income Fund PIF

Hi

I have been reading through this thread history with some interest.

It seems Wellington made a whole lot of promises about distributions and buy backs which have been broken.

They say they are not drawing fee's but they are drawing out all of their costs.

The fee when they start to get it will be pure profit as they can even draw out their tax as a cost to the fund.

The financials are the bare minimum that can be provided.

Question is what are unit holders going to do. With City Pacific the unit holders I understand actively pursued a new manager rather than with Wellington you got a manager who was paid $4 million to fund the road show by MFS to convice you they were the one.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Gardie I hope investors in City pacific FMF do not end up 'out of the frying pan into the fire'. I have been doing some research into their new RE, Trilogy Balmain and it appears Trilogy was previously MDRN. Hhere is an interesting article on ASIC's website. Regards, Seamisty

06-172 Queensland investors recover losses in failed solicitors mortgage scheme

Tuesday 30 May 2006


Thirty-seven investors in a Queensland-based mortgage investment scheme have today been awarded $792,509.25 in damages and interest after ASIC mounted a successful class action.

In August 2003, ASIC brought the class action against Lawyers Private Mortgages Pty Ltd (LPM) to obtain damages for the mostly retired investors from south-east Queensland. LPM was a practitioner nominee company of the Brisbane legal firm McCarthy Durie Ryan Neil Solicitors (MDRN), which promoted the solicitors’ mortgage scheme (the scheme).

The relatively inexperienced investors, whose original investments ranged from $5,000 to $250,000, were promised an annual return of 9.25 per cent. Their money was used by LPM to lend $1.4 million to Rivett Project Results Pty Ltd (RPR) in 1999. RPR was the developer of the Yandina Greens Retired Folks Village Pensioner Accommodation at Yandina, Queensland.

The loan defaulted in March 2000 and Jessup and Partners were subsequently appointed as the liquidator to wind up the scheme together with other schemes run by MDRN.

MDRN partners, Mr Jonathan McCarthy, Mr Bruce Durie, Mr Philip Ryan and Mr Ian Neil, who promoted and managed the scheme, were also included in the ASIC action.

The Federal Court subsequently found that MDRN made misleading statements as well as negligent misstatements when they promoted the mortgage scheme to investors. These statements concerned the asset position of RPR and its director Mr John Rivett, whose net asset position was considerably less than stated in the investment summary, while his company, RPR, had no net worth.

A statement concerning the pre-sale of the retirement village units was also found to be misleading by the Court. The investment summary contained statements that all 12 units in stage one of the retirement village development had been sold. The Court found that although there were contracts of sale and pre-sale offers for some of the 12 units in stage one, there were no sales of, or offers for, all 12 units.

‘The decision is an important one for ASIC in that it provides a judicial interpretation of the law regarding misleading and deceptive conduct in relation to the promotion of solicitors mortgage investments, and related insurance issues’, Ms Jan Redfern, ASIC’s Executive Director of Enforcement said.

‘Fortunately these schemes are no longer a significant issue because all such schemes are now required to be registered with ASIC and to hold an AFSL. However, this outcome will assist ASIC in formulating future regulatory responses in relation to losses incurred under the old scheme’, Ms Redfern added.

The manner in which the Court made determinations as to which aspects of MDRN’s alleged conduct was misleading and deceptive provided ASIC with significant guidance to determine the merits of future cases.

The Court also determined that where there was dishonesty involved in the conduct which was found to be misleading and deceptive, such conduct was not covered under an insurance policy taken out by MDRN which contained an effective clause exempting dishonest conduct from cover.

Cross-claims were made by MDRN against insurers St Paul International Insurance Company Limited (St Paul) and QBE Insurance (Australia) Limited (QBE). The cross-claims were made by MDRN because both St Paul and QBE declined to indemnify MDRN for civil liability arising out of the proceedings.

The Court directed MDRN to recover against St Paul in respect of one investor and against QBE in relation to the remaining thirty-six investors.

Background
In February 2001, ASIC commenced a major investigation into solicitors mortgage investment schemes.

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

Just for info, that case relates to a fraud by an employee. It's the case they always use.

However, Mr. Ryan, a senior executive of Trilogy was found to have breached a client's trust (Jessup's case).

Some background here (my site) http://www.moneymagik.com/trilogy1.php

No one is sure if we have jumped from the 'frying pan' into the 'fire'.

I think most are hopeful, but there's already a rumble of discontent.

Anyway, we had to get away from City - so, what's the choice?

Away from the shark, to the net of the fisherman?

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

Anyone with a spare couple of hours might like to replay the DVD made at last year's WC Melbourne road show. A fresh viewing of this JH address is certainly interesting, especially after the first 25 minutes have passed.

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

In one of my submissions to the senate inquiry (submission 182) I noted that 'a frozen fund was a manager's delight' at page 24. http://www.aph.gov.au/SENATE/committee/corporations_ctte/fps/submissions/sub182.pdf

I read the following article and note that investors in the Octaviar fund were in a position not unlike that of FMF investors. http://www.asa.asn.au/ShareholderOpinion.asp?ID=SO186.xml

In my submission 182b on page 3 under the heading 'the FMF has a new manager' I stated that I felt compelled to make a choice to change manager without really knowing what I was heading into because I was so concerned about City's management of the FMF. I think investors in Octaviar were likewise compelled to make a choice they didn't want to make.

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

I would like to add, that what you give (by way of a constitutional amendment), you can take away. If the 'out' clause is too oppressive, then you might have a meeting and delete it. As I mentioned before, if you feel oppressed by the fund being listed, then you can de-list by way of a meeting.

In the main, investors in Octaviar will probably suffer from what FMF investors suffer from, investor apathy. Many investors live in hope, but I have a strange feeling that they'll wallow in mire. It's good the see your class action go ahead, but it's a shame you couldn't run the class action yourselves to save up to the whole amount it's cost you. I'm fearful any future FMF litigation (if any) will go the same way.

I've learnt a lot from reading the Octaviar thread, thanks.