Wellington Capital PIF/Octaviar (MFS) PIF

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Lifting of the trading halt could have been a stuffup by NSX. Or maybe the need for the halt passed when the ASIC action was made public. I can't see why WC would halt trading in PIF prior to releasing info on their other trusts. But then again, I'm a lackey.

Question: any $ penalties eventuating from the ASIC action against King and Co, do they go to us or ASIC? The damage was caused against us Unit holders?

As for King & Co's PI insurance. I expect it doesn't cover them for fraud. But should they tap their insurance, does it mean there's less for us Unitholders? I.e. has ASIC beaten our class action, or any future action by WC, to the PI insurance $$?

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Well , well well, we are back in HALT!!!!!Seamisty

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Maybe ASIC were embarrassed into acting now. Anderson getting another $1Mil odd out of the trough.

seamisty: I read through the ASIC website release. It reads to me that MFSIM transferred the money first, and then created the paper 'assets'.

I'm waiting on action by ASIC about the false statements in the interim financial report (announced to the ASX on 28 April 2008) that the loan against the Fortress charge had been paid "in full". Remember what Holmes JA: that the notification regime in chapter 2K was merely to alert creditors to go and find out what the company owes. Thanks for the decision. Bit difficult to achieve when the company makes false statements. So a bit of legislation that was probably set up to balance out companies' public release shennanigans has been hobbled. Lets hope the High Court sees it as McMurdo did. Otherwise it's back to the drawing board for the Reps and Senate.

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

There couldn't possibly be panic in the ranks, could there?

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

There you go - the March 2009 Issue of VICDIRECTOR the Victorian chapter of the Australian Institute of Company Directors (AICD) lists Mr Guy Hutchings MAICD Manager, Health Super as having recently completed AICD's Company Directors Course.

See the list at page 3 - http://www.companydirectors.com.au/...B67-4A4B96A0909C/0/AICDVICNewsletterMar09.pdf

The $550 membership and joining fees also entitle members to a range of Member Only services at special rates including D&O Insurance Connect (that's Directors and Officers Insurance).

I am sure all PIF investors will wish Guy hearty CONGRATULATIONS on completing the course!!

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

There couldn't possibly be panic in the ranks, could there?

I'm hoping words like these will strike fear into the hearts of a lot of past and present fund managers:-

"... In taking this action, ASIC is addressing the core obligations of a
responsible entity and its directors and officers to operate the fund with care
and diligence, and in the best interest of the fund's members. ..."

http://www.asic.gov.au/asic/asic.nsf/byheadline/09-214AD+ASIC+commences+civil+pr\ oceedings+against+former+officers+of+MFS+Group?openDocument

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

Is this the earth shattering price sensitive disclosure http://www.nsxa.com.au/ftp/news/021722118.PDF listed as Market Disclosure Other!

Apart from the Court date, all other information was released last Friday - it's a disgrace!!!!!

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

Here is the detailed list of the alleged contraventions and Orders sought from the ASIC news release.

Defendant Michael King

Alleged contravention*
Section 601FC(5) (duties of a responsible entity)
Section 601FD(3) (duties of officer of responsible entity)
Section 209(2) (related party transactions)

Orders sought
in relation to the payment of $103 million to a related party not for the benefit of PIF members Pecuniary penalty (max: $200,000 per breach)
Compensation of $103 million
Disqualification from managing corporations

Defendant Craig White

Alleged contravention*
Section 601FC(5) (duties of a responsible entity)
Section 601FD(3)
Section 209(2)
Section 344(1)

Orders sought in relation to the payment of $147.5 million to a related party not for the benefit of PIF members and the creation of false documents Pecuniary penalty (max: $200,000 per breach)
Compensation of $147.5 million
Disqualification from managing corporations

Defendant Guy Hutchings

Alleged contravention*
Section 601FC(5)
Section 601FD(3)
Section 209(2)
Section 344(1)

Orders sought in relation to the payment of $17.5 million to a related party not for the benefit of PIF members and the creation of false documents Pecuniary penalty (max: $200,000 per breach)
Compensation of $17.5 million
Disqualification from managing corporations

Defendant David Anderson

Alleged contravention*
Section 601FC(5)
Section 601FD(3)
Section 209(2)
Section 344(1)

Orders sought in relation to the payment of $147.5 million to a related party not for the benefit of PIF members and the creation of false documents Pecuniary penalty (max: $200,000 per breach)
Compensation of $147.5 million
Disqualification from managing corporations

Defendant Marilyn Watts

Alleged contravention*
Section 601FC(5)
Section 601FD(3)
Section 344(1)

Orders soughtin relation to the creation of false documents Pecuniary penalty (max: $200,000 per breach)
Disqualification from managing corporations

Defendant Managed Investments Ltd

Alleged contravention*
Section 601FC(5)

Orders sought In relation to the payment of $147.5 million to a related party not for the benefit of PIF members and the creation of false documents Pecuniary penalty (max: $200,000 per breach)
Compensation of $147.5 million

Defendant Octaviar Administration Pty Ltd

Alleged contravention*
Section 601FC(5)
Section 601FD(3)
Section 209(2)

Orders sought In relation to the payment of $130 million to a related party not for the benefit of PIF members Pecuniary penalty (max: $200,000 per breach)
Compensation of $130 million

Defendant Octaviar Castle Pty Ltd

Alleged contravention*
Section 601FC(5)
Section 601FD(3)
Section 209(2)

Orders sought In relation to the payment of $130 million and $103 million to a related party not for the benefit of PIF members. Pecuniary penalty (max: $200,000 per breach)
Compensation of $103 million

* All contraventions are of the Corporations Act 2001 (Cwth).

 

[simgrund]

Re: Octaviar MFS Premium Income Fund PIF

Here is the detailed list of the alleged contraventions and Orders sought from the ASIC news release.

Defendant Michael King
Compensation of $103 million
Disqualification from managing corporations

Defendant Craig White
Compensation of $147.5 million
Disqualification from managing corporations

Defendant Guy Hutchings
Compensation of $17.5 million
Disqualification from managing corporations

Defendant David Anderson
Compensation of $147.5 million
Disqualification from managing corporations

Defendant Marilyn Watts
Disqualification from managing corporations

Defendant Managed Investments Ltd
Compensation of $147.5 million

Defendant Octaviar Administration Pty Ltd
Compensation of $130 million

Defendant Octaviar Castle Pty Ltd
Compensation of $103 million

Thanks Marcom for your keen due diligence.
These past 18 months have been hell but well worth the wait just to see this listing.
We can be sure ASIC won't blink.

PS I took the liberty to trim the list; apologies

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Just to remind you about MFSIM's dynamic duo, here is a piece from the Sydney Morning Herald's CBD column on 11 Feb 2008:

Mark their words

Investor, a glossy magazine published by MFS and left in the lobbies of MFS hotels and properties, features golf tournaments sponsored by MFS, interrogating pieces on MFS products and illuminating interviews with MFS executives.

Take the December edition, which features an illuminating interview with Guy Hutchings, the chief executive of MFS Investment Management, and one of his fund managers, Marilyn Watts.

Hutchings runs the MFS Premium Income Fund, which manages about $770 million in funds and two weeks ago put a stop on punter withdrawals for six months, given the few issues the company is facing.

The parent company MFS remains suspended from trade as it tries to shore up its debt position with moves including emergency asset sales like the Stella tourism group.

Hutchings's breezy chat with Watts began with some of the broad challenges ahead. But, oh, the irony of what was around the corner.

Hutchings: "The US subprime debt problem looks like it will take a while yet to sort out."

Watts: "Yes, I think it will be well into 2008 before they see the worst of it."

Gosh, hope it's not going to get too much worse.

And among Hutchings's thoughts just weeks before MFS and its funds hit the skids: "I see the main risk from this US subprime problem being the flow-on effects to other borrowers around the globe. We still don't know which banks or other companies are holding the bulk of the losses. It's been the parcelling up of those dud loans and their on-selling to other banks and investors that is causing the current credit market problems." Oh, dear.

There's more from Hutchings. "Corporate America - and for that matter Corporate Australia - have their borrowing costs hitched to the wholesale money market rates."

Watts was a touch prescient: "I think investors this year [2007] have had quite a few surprises sprung on them and next year [2008] will probably be no different."

Watts even gave some tips on the importance of "actually understanding what you are investing in. There is no substitute for doing your own homework."

So there you go, straight from the horses mouth! - and we didn't really understand what they were trying to tell us.

Yes Marcom, and quoted from the 'dynamic duo' at the end of that article;

M Watts;"Well I think there are plenty of good fund managers who, LIKE US, are well positioned for the opportunities which will no doubt arise over the next few months."

Hutchings; "Thats true, Got time for a coffee?"


Watts; "No, thanks anyway. I've diversified into tea."

The dynamic duo could well be in 'deep poo'oh with some interesting unexpected opportunities!!!!!! Seamisty

Seamisty

 

[charles36]

Re: Octaviar MFS Premium Income Fund PIF

If ASIC is successful Mr. Guy Hutchings recent alleged academic qualification may not be of much use to him but may help a lot of others. For an indication as to how brazen they all were you should try and obtain a copy of the presentation video that MFS presented to a hearty Christmas function that we all paid for at the Sebel Hotel, The Rocks, N SW on the 27 November, 2007 wherein they outlined how secure the fund was and the projections for the future. On the following day, the 28 November, 2007 they removed the $200 million and distributed it in quick style, not to our benefit of course. Talk about misleading?

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

ASIC may look at more MFS charges ;;; Bryan Frith | November 03, 2009
Article from: The Australian
AS with Centro, ASIC's civil proceedings against former executives of the failed MFS involves charges of breach of fiduciary duties and failing to present accounts giving a true and fair view of the company's affairs, with the added spice of claims that a paper trail of false transactions was created to deliberately mislead the company's non-executive directors, auditors, bankers and even its own compliance officers.

Moreover, reading between the lines, more charges may be in the offing if ASIC succeeds in these proceedings, because the events outlined by ASIC would indicate MFS was probably already insolvent before the alleged contraventions took place.

Essentially, ASIC claims the executive officers caused MFS Investment Management, now known as Managed Investments Ltd, the responsible entity of the Premium Income Fund, to draw a $150-$200 million facility granted to the fund by Royal Bank of Scotland, and immediately pass the funds to MFS, apparently without even going through the fund's bank account, to enable the parent company to pay down pressing debt obligations.

The funds were the property of PIF, which received no benefit from the transaction, and in fact suffered losses. Moreover, as passing the funds up the tree to MFS entities was a related party transaction it required prior unitholder approval, which was not obtained, in contravention of the Corporations Act.

ASIC is seeking not only civil penalties (of up to $200,000 for each breach) against the former executives, but orders against all but one of the executives, that they be required to pay compensation ranging from $103m to $147.5m.

ASIC is seeking also to have the former officers disqualified from managing a corporation, which includes being unable to act as a director of a company.

PIF's responsible entity, now controlled by Jenny Hutson's Wellington Capital, already has proceedings afoot seeking compensation of $147.5m in relation to the funds that were transferred MFS entities, and litigation funder IMF is funding a class action. Although the responsible entity's action is against MFDS corporate entities, ASIC is after the executive directors and officers involved.

But unlike Centro, or for that matter James Hardie, ASIC is not pursuing the non-executive directors because it considers they were misled and provided false information and documents, which according to ASIC, created sham transactions that were backdated and purported to transfer assets (largely valueless) as security for the $150m.

The defendants are former MFS chief executive Michael King, former deputy chief executive and MFSIM director Craig White, former MFSIM chief executive and director Guy Hutchings, former MFS chief finance officer David Anderson, and former MFSIM fund manager Marilyn Watts.

ASIC claims that in June 2007 MFS borrowed a $250m short-term facility from Fortress Credit, which was due to be repaid on August 31. MFS negotiated an agreement under which it would repay $100m of the debt, plus a $3m extension fee by November 30, and repayment of the remaining $150m would be extended until March 2008.

MFS did not have sufficient funds to repay the $100m and so MFSIM was used to borrow on behalf of PIF and transfer the funds to MFS entities, in breach of its fiduciary responsibilities to PIF and its unitholders.

Interestingly, King is among those charged by ASIC although he was not a director of MFSIM or the other MFS entities involved, and he was not a signatory to any of the documents. However, ASIC contends that he was fully aware of what was taking place, that White was in contact with him on almost a daily basis and acted in accordance with his instructions, and the regulator cites a bundle of emails to back up its contentions.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

I notice in yesterdays PIN NSX release that WELLINGTON INVESTMENT MANAGEMENT LIMITED as the former responsible entity of the PREMIUM INCOME FUND has had a name change to MANAGEMENT INVESTMENTS LIMITED!!!!!!! The long awaited release containing price sensitive information which had already been in the public domain since friday????And still no correction to the previous PIF update of 31st Augusthttp://www.newpif.com.au/investor_updates/InvestorUpdate_310809.pdf to inform existing and potential investors that WELLINGTON INVESTMENT MANAGEMENT LIMITED as the former responsible entity of the PIF is STILL a named respondant in the Class Action as a result of failing to cooperate with the lawyers regarding access to information and documentation which may have assisted in the successful outcome of the CA:nono:I consider this to be price sensitive and should have been corrected immediately it became known.:frown:Seamisty

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

A further paragraph to the article from the Australian today (Seamisty's Post #4371) as follows:

"In view of the claims about falsifying records, deliberately misleading the auditors, bankers, non-executive directors, and compliance officers who suspected breaches in relation to the transfers, it is perhaps surprising that some of the parties were charged only with civil breaches of their fiduciary responsibilities to a managed investment scheme and not with criminal offences."

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

Seamisty, yes it looks like ASIC will pursue criminal charges but will probably wait until the full results of the liquidators investigations into insolvent trading etc. It is no coincidence that the PIF RBS loan affair is the first of the ASIC actions - while it helps us investors (& reduces the political pressure on ASIC) the main reason is to have the issue of the insolvency date fixed by court decision. Once this is established to be November 2007 all of the liquidators investigations can flow from that fact - then all of the Directors are caught in the net and the various transactions that were completed during the insolvency period will need to be examined.

Here is what ASIC has to say on the question.

What are the consequences of insolvent trading?
http://www.asic.gov.au/asic/asic.ns...nsequences+of+insolvent+trading??openDocument

There are various penalties and consequences of insolvent trading, including civil penalties, compensation proceedings and criminal charges.

The Corporations Act provides some statutory defences for directors. However, directors may find it difficult to rely upon these if they have not taken steps to keep themselves informed about the company’s financial position.


Civil penalties

Contravening the insolvent trading provisions of the Corporations Act can result in civil penalties against directors, including pecuniary penalties of up to $200,000.


Compensation proceedings

Compensation proceedings for amounts lost by creditors can be initiated by ASIC, a liquidator or a creditor against a director personally. A compensation order can be made in addition to civil penalties.

Compensation payments are potentially unlimited and could lead to the personal bankruptcy of directors. The personal bankruptcy of a director disqualifies that director from continuing as a director or managing a company.


Criminal charges

If dishonesty is found to be a factor in insolvent trading, a director may also be subject to criminal charges (which can lead to a fine of up to $220,000 or imprisonment for up to 5 years, or both). Being found guilty of the criminal offence of insolvent trading will also lead to a director’s disqualification.

ASIC has successfully prosecuted directors for allowing companies to incur debts when the company is insolvent, and has sought orders making directors personally liable for company debts. ASIC also runs a program to visit directors, where appropriate, to make them aware of their responsibilities to prevent insolvent trading.

The good news is that taking steps to ensure your company remains financially sound will minimise the risk of an insolvent trading action. It may also improve your company’s performance.

 

[The Owls]

Re: Octaviar MFS Premium Income Fund PIF

ASIC may look at more MFS charges ;;; Bryan Frith | November 03, 2009
Article from: The Australian
AS with Centro, ASIC's civil proceedings against former executives of the failed MFS involves charges of breach of fiduciary duties and failing to present accounts giving a true and fair view of the company's affairs, with the added spice of claims that a paper trail of false transactions was created to deliberately mislead the company's non-executive directors, auditors, bankers and even its own compliance officers.

I notice in the above quote the executives failed to present accounts giving a true and fair view of the company's affairs, with the added spice of claims that a paper trail of false transactions was created to various groups including the Auditors. Will this help the Auditors in the CA and reduce PIFs claim againts there PI insurance.

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

A bit more detail on the RBS loan misappropriation in
http://www.smh.com.au/business/asic-accuses-mfs-five-of-deceit-on-150m-loan-20091102-htjp.html

ASIC's allegations, pieced together from its investigation of email and computer document trails, go on to say that the PIF deal, and a separate $17.5 million in December to a New Zealand subsidiary were only recorded as ''a one-line entry'' in company accounts until January 23, 2008.

ASIC claims that on that date, Craig Robert White, the former deputy chief executive of MFS, and David Mark Anderson, the former chief financial officer and company secretary, instructed staff to draw up documents saying the total $147.5 million had been invested by an MFS subsidiary on behalf of PIF.

The commission's draft statement of claim then alleges that from early February 2008, various officers in the MFS group participated in the creation of false documents, backdated to the last three months of 2007 and designed to show meetings and an approval process for the transactions.

It suggests that the $150 million from Royal Bank of Scotland was paid into a bank account of MFS's investment management arm early on November 30, 2007, and by lunchtime, $130 million was switched across to MFS Administration - with $103 million of that money sent on to Fortress.

ASIC's allegations are that MFS's former chief executive, Michael Christodolou King, authorised Mr White's proposal to obtain the $150 million loan and negotiated an extension to November 30 on the Fortress loan at a time when he knew the company could not meet its obligations. The extension required MFS to repay $100 million and pay a $3 million ''extension fee'' by November 30.

Apart from Mr White and Mr Anderson and MFS Investment Management's former CEO Guy Hutchings, all of whom ASIC is suing for $147.5 million in compensation, it is claiming $103 million against Mr King, and penalties and disqualification against a former fund manager of MFS Investment Management, Marilyn Watts.

Source: The Age

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Seamisty, yes it looks like ASIC will pursue criminal charges but will probably wait until the full results of the liquidators investigations into insolvent trading etc. It is no coincidence that the PIF RBS loan affair is the first of the ASIC actions - while it helps us investors (& reduces the political pressure on ASIC) the main reason is to have the issue of the insolvency date fixed by court decision. Once this is established to be November 2007 all of the liquidators investigations can flow from that fact - then all of the Directors are caught in the net and the various transactions that were completed during the insolvency period will need to be examined.

Too true. Had ASIC moved a year ago to establish the date of insolvency then all these wasteful court actions, that had all the 'law' 'firms' in a flap and caused so much "disruption", would likely have been unecessary. What a total and utter waste of time, money and Australia's intellectual capital.

ASIC shouldn't have left their duties to Deloitte. KPMG shouldn't have left their duties to their former employee King. When will these people learn that it's easier to just do the job you're paid to do.

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

The Owls - I was just about to ask the same questions as you. It seems to me - as an amateur - that the CA submissions could be affected, but I guess that we have to be patient (again) and leave it to the experts. Meanwhile, WC give me no cause for confidence and any distribution in the near future seems unlikely.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Hmmm. Perhaps the only reason ASIC has finally made a move is to make the application for the High Court Appeal go away. I'm guessing ASIC are under a lot of pressure from the 'law firm' lobby to restore industry practice to pre McMurdo days.

ASIC may simply be taking the path of least resistance. Not only has the PTQ's High Court application made that path look increasingly arduous, but it's very likely that the path for this ASIC current action against MFSIM was made less arduous by the discoveries during McMurdo's hearings and Carney's/IMF class action.

I'm sorry but this whole experience has made me a little cynical. I'm reserving my judgement on ASIC's true motivation; for the moment.

The Treasurer's answer to the question from the floor at the London School of Economics is beginning to look increasingly heartless. We suspected their was foul play with PIF but we were ignored and to some degree even dismissed for being greedy.