LM Investment Management - Lack of confidence

[ASICK]

What's an FM?

... The Atchison report for Trilogy is dated 5 October so when did LM actually make the decision to abandon the Sell / Hold was it before or after the date of the Atchison Report? ...

Hi Rodent, what's an "FM"?

I'm curious why you asked the quoted question? Is it because LM disclosed that the assets would not be split on the day after the Atchison report?

18 October 2012 : http://www.lmaustralia.com/Downloads/Unitholder-letter/adv-atchison-report-rebuttal-18-10-12.pdf

19 : http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-cpaif-follow-up-proxy-19-10-12.pdf

"The assets of the Fund will not be split. This decision was made following our last rounds of meetings with advisers and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the Fund."

 

[RODENT69]

Re: What's an FM?

Hi Rodent, what's an "FM"?

I'm curious why you asked the quoted question? Is it because LM disclosed that the assets would not be split on the day after the Atchison report?

18 October 2012 : http://www.lmaustralia.com/Downloads/Unitholder-letter/adv-atchison-report-rebuttal-18-10-12.pdf

19 : http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-cpaif-follow-up-proxy-19-10-12.pdf

"The assets of the Fund will not be split. This decision was made following our last rounds of meetings with advisers and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the Fund."

ASICK my learned friend FM are the initials of a Director in LM that I have had extensive communication with over the last 52 Months!!!

My Email was all about timings of what and when things happened, and was an attempt to get LM to say exactly at what point they decided to drop the Sell/Hold option. As you can read they DID NOT ACTUALLY SPECIFY WHEN. The date of the Atchison report was 5th Oct and at that point they knew LM was still intending to proceed with Sell/Hold because they were able to offer up their alternative position, - "Orderly realisation of all Unit Holder assets and return of capital to unitholders"

I fully realise its all too late, but just as in the past with questions to LM I was just trying to get an honest reply - but never did
My view is that this point of difference was a significant factor in the decision making process to support Trilogy.
Hopefully when I get my formal reply from Asgard, it may say why they decided to support Trilogy

 

[ASICK]

Does it really matter?

# 69, Does it really matter?

Asgard - an experienced company:
http://www.asgard.com.au/

28 September 2012 - Notice of Meeting & Explanatory Memorandum:
http://www.trilogyfunds.com.au/site...ency (NOM + EM)_INTERNAL PAGES_ WEB_FINAL.pdf

"Step 3: Vote on the Resolutions either by attending the Meeting or by completing and returning the
enclosed Proxy Form prior to 5.00pm AEDT on 29 October 2012 by any of:
Online: www.linkmarketservices.com.au
See the Proxy Form for further details
Mail: Link Market Services Limited, Locked Bag A14, Sydney South, NSW, 1235
Fax: +61 2 9287 0309
Email: vote@linkmarketservices.com.au
See the Proxy Form for further details
By hand: Link Market Services Limited, 1A Homebush Bay Drive, Rhodes, NSW, 2138"

18 October 2012 : http://www.lmaustralia.com/Downloads...l-18-10-12.pdf

19 October 2012 :
http://www.lmaustralia.com/Downloads...y-19-10-12.pdf

"The assets of the Fund will not be split. This decision was made following our last rounds of meetings with advisers and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the Fund."

The meeting - 1 November 2012:
http://www.lmaustralia.com/Download...ult-and-business-as-usual-for-LM-01-11-12.pdf

As I understand it, you say that Asgard had an independent report which you suspect you'll never be privy to. I'd guess that if the board of Asgard commissioned the report, the report would doubtlessly influence the board (at least to some extent).

In any event, If LM's statement of 19 October 2012 (excerpted above) had any influence on the board of Asgard, the board had from 19 October 2012 (or thereabouts) until 5 pm 29 October 2012 to make any change to its voting position.

 

[ASICK]

They Didn't Want YOU to Know Who They Were!

I didn't notice this before, but it's an interesting signature block on the notice of meeting:
http://tinyurl.com/cfj8xpu

http://www.moneymagik.com/convening_members_agent.jpg

Of course the signature is obviously that of Mr. Rodger Bacon of Trilogy Funds Management Limited:
http://www.moneymagik.com/signatures.jpg

The notice was signed on 28 September 2012, just four days after the company, "Convening Members' Agent Pty. Ltd." was registered (24 September 2012):
http://tinyurl.com/canrfbb

Now, that's embedding the convening members (those who hold at least 5% of the units on issue).

The company, Convening Members' Agent Pty. Ltd. (registered on 24 September 2012) was the convening member & Bacon acted as agent for that company when he signed the NOM (Notice of Meeting) on 28 September 2012.

Clearly the convening members were shy about disclosing who they were, and Bacon acted to aid that non-disclosure.

It's important to understand the distinction between calling the meeting and paying for the meeting. While we might say that "Trilogy called the meeting", the fact is that the convening member called the meeting - in this case, it was a newly registered company obviously a construct of the member or members who was/were at that time, an actual investor or investors, or representative/s of an investor or investors in the fund, or agent/s of an investor or investors in the fund.

It seems to me that Bacon signed because none of the directors of Convening Members' Agent Pty. Ltd. would put their signature to the document - They didn't want you to know who they were. A lot of effort has gone into this little arrangement.

 

[ASICK]

Ways and Means

Now, please don't be thinking that I'm suggesting that there's anything illegal about Bacon signing for the actual convening members' construct - there isn't. And there's nothing wrong with Bacon not disclosing his name under his signature.

As disclosed, there is two steps of isolation - one using the construct, and the second using Bacon as agent for the construct. These steps would not prevent disclosure to other platforms, and certainly not to the media, after all, those entity have the means and ways not readily available to ordinary investors.

Any ordinary investor out of the loop (that is, without the said ways and means) really wouldn't have had a clue.

 

[ASICK]

Re: Trilogy Uses Registry to Spruik its Fund - Your turn now?

I received a gratuitous letter from Trilogy - I wasn't impressed.

Here's an amended copy of the letter - enjoy:

http://moneymagik.com/trilogy__funds_management_spruik_2012.jpg

For a more information about the use of the scheme's registry, here's an excerpt from a letter sent to a PFMF investor:

"For your information, there are also strict obligations imposed under the Corporations Act in relation to the way information contained in the register may be used. In particular, section 177 states:
"a person must not:
(a) use information about a person obtained from a register kept under this chapter to contact or send material to the person; or,
(b) disclose information of that kind knowing that the information is likely to be used to contact or send material to the person."

That limitation however does not apply if the use or disclosure of the information is:
"(a) relevant to the holding of the interests recorded in register or the exercise of the rights attached to them: or
(b) approved by the scheme.""

Applicable law:
s. 173 Corporations Act 2001 (Cth) :
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s173.html
s. 177 Corporations Act 2001 (Cth) :
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s177.html

 

[ASICK]

Asgard - Lost in Space?

I notice the links from a previous post don't seem to work. They check out on LM's site. Maybe I made a mistake when I make the links : http://www.lmaustralia.com/LM-Mortgage-Funds/Currency-Protected-Australian-Income-Fund.aspx

What went on?

1. An investor's/s' platform/s (let's call it/them the "convenor") decided to support Trilogy in its pusche for the fund.
2. 24 September 2012 - The convenor didn't want to be identified so it set up a company Convening Members' Agent Pty. Ltd. which was to become to the convening member.
3. 28 September 2012 - Rodger Bacon (of Trilogy Funds Management) signed as agent for Convening Members' Agent Pty. Ltd. (the convening member).

Why did they do it?

1. To oust LM as manager of the fund in order to reduce the management fee.

Would ousting LM from the fund improve Trilogy's chance of taking over the LM FMIF?

Essentially No - the vote would be the same other than Trilogy would have access to fund money which it could possibly use to promote itself in a run for the LM FMIF (of course, in the best interests of members of the fund).

What was the benefit (prior to 19 October 2012)?

For investors?
1. A reduction in management fee to .5% FUM
For Trilogy?
1. A .5% FUM fee which according to LM would be about $350k per annum.

What was the downside (prior to 19 October 2012)?

For investors?
1. None
For Trilogy?
1. None.

On 19 October 2012, LM disclosed it would wipe the fee for the fund:
http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-cpaif-follow-up-proxy-19-10-12.pdf

What was the benefit (from 19 October 2012)?

For investors?
1. None.
For Trilogy?
1. A .5% FUM fee which according to LM would be about $350k per annum.

What was the downside (from 19 October 2012)?

For investors?
1. A .5% FUM fee which according to LM would be about $350k per annum.
For Trilogy?
1. None.

Prior to 19 October 2012, members stood to benefit because the fee on the fund would be reduced, but on 19 Octber 2012, that all changed - the benefit dissipated because LM had, as Trilogy says, capitulated - I would say, met investor demands because they saw the "writing on the wall" (or "Tablet" for new age thinkers).

All of a sudden, there was no benefit to continue along with Trilogy - in fact, continuing along with Trilogy was going to cost members' money.

As the meeting continued, there was only one entity which stood to benefit, and that was Trilogy. The convening member (Convening Members' Agent Pty. Ltd.) continued along with the meeting in order to benefit Trilogy at the expense of investors (who now bore the brunt of a .5% FUM fee).

Had the meeting been discontinued, it would have cost the fund nothing - and the big loser would have been Trilogy. Convening Members' Agent Pty. Ltd. certainly saved Trilogy's Bacon (literally).

But if Convening Members' Agent Pty. Ltd. is a construct of one or more "platforms", does/do the platform/s owe a duty of care to investors in the fund to act in members' best interests? If it/they does/do, then did it/they act in members' best interests when they continued along with the meeting after 18 October 2012?

I really think those sorts of questions are worth pursuing. Wouldn't it be ironic is the convening member/s (behing the mask of Convening Members' Agent Pty. Ltd.) were found liable to pay Trilogy's management fee? Perhaps that's a question ASIC might care to answer (that is, if a member of the fund was to put the question to ASIC).

 

[ASICK]

Not an Ordinary Meeting Called by Ordinary Investors

As I see it, there's a legal distinction between members of the fund and the platforms. If members call a meeting they're entitled to bring meetings which might cause a fund loss - but can that be said for "platforms" and agents?

What obligation (if any) does/do the platform/s have to act in investors' best interests?
What obligation (if any) does the company Convening Members Agent Pty. Ltd. have to act in investors' best interests?
What obligation (if any) does Rodger Bacon (as agent) have to Convening Members Agent Pty. Ltd.?

I think these are areas worth exploring. The recent meetng was not what one might call an ordinary meeting called by ordinary investors - this seems to have been something that was entirely out of their hands.

 

[RODENT69]

Re: Asgard - Lost in Space?

ASICK I think your question re does it really matter has been answered by this post by you , the Who, What and When always matters, let alone the Why.
In my complaint letter to Asgard I specifically asked on what actual date the Trustee/s decided internally within Asgard to support Trilogy. I am hopeful they will be honest. FM from LM had previously told me when Asgard actually lodged its votes.

Wonder of Wonders - the latest communication from LM popped out yesterday 16 Nov, and for the first tiime EVER its signed by Drake and 3 other Exec Dir, and as a communication piece they seem to be learning
The other wonder is that LM has actually quoted some investor numbers.

The one I find interesting is 237 Investors for the WFMIF, its interesting because its the EXACT number that Asgard had previously advised me that they had as the Asgard investor number on their platform?

 

[ASICK]

APGF

CYRE Trilogy took over some funds from APGF (they had disgruntled investors too).

CYRE Trilogy:
http://www.cyretrilogy.com.au/

APGF:
http://www.apgf.com.au/

Readers will notice that APGF discloses financial information about its fund - CYRE Trilogy does not.

CYRE Trilogy might spruik the odd bit of self-praise, but that's all the public see - just like Trilogy's site, only the spruiks.

There's some good news - a PFMF member contacted APGF and was told by the person contacted that this thread is watched very closely indeed.

I'll bet there's no love lost between APGF and CYRE Trilogy.

Trilogy's last run for an APGF fund didn't end well for Trilogy, and can you believe it? they had a grumble to ASIC - and what did ASIC do? probably SFA. Good onya APGF - Trilogy foiled - you're all learning down there.
http://www.investordaily.com.au/cps/rde/xchg/id/style/14734.htm?rdeCOQ=SID-0A3D9632-3AF5B24D
(investor daily to carry a lot of Trilogy's spruiks)

Some new audio has been released on the front page of http://www.moneymagik.com/

Also, a link which shows how well a damaged fund taken over by Stacks is doing - want a replacement manager? Then consider Stacks - no, I'm not an agent for Stacks - I just think they're a solid performer.

 

[Mysteryman]

Re: Not an Ordinary Meeting Called by Ordinary Investors

A very astute analysis of the calendar of events laid out in your last few emails, Asick. One wonders who are the investors with 5% investment in the WFMIF, represented by the Convening Members Agent. Did they also have a vested interest in Trilogy, despite the fact that there appeared to be no further reason to continue with the meeting and hence vote, given LM had changed their plans. I don't suppose it is illegal even if they did have connections with Trilogy.

But to be devil's advocate for a moment - it could be argued that the investors represented by the Convening Member's agent (CMA) felt that the pain of fees in the short term were to be tolerated in order to achieve the long term gain of Trilogy acquiring the main fund when fees would then be zero!

None of the Investors behind the CMA would have achieved their aim of Trilogy becoming RE without the support of the likes of BT(Iselect wrap) and Asgard voting for Trilogy, so the question of why these 'platforms' voted for Trilogy still remains unanswered. A letter has been written to BT(Iselect wrap) requesting a reason but so far no answer has been received.

 

[ASICK]

"The Devil's Advocate"

A very astute analysis of the calendar of events laid out in your last few emails, Asick. One wonders who are the investors with 5% investment in the WFMIF, represented by the Convening Members Agent. xxxxx.

But to be devil's advocate for a moment - it could be argued that the investors represented by the Convening Member's agent (CMA) felt that the pain of fees in the short term were to be tolerated in order to achieve the long term gain of Trilogy acquiring the main fund when fees would then be zero!

None of the Investors behind the CMA would have achieved their aim of Trilogy becoming RE without the support of the likes of BT(Iselect wrap) and Asgard voting for Trilogy, so the question of why these 'platforms' voted for Trilogy still remains unanswered. A letter has been written to BT(Iselect wrap) requesting a reason but so far no answer has been received.

Hi Mysteryman.

re: Paragraph 1 - I was speaking about the question of whether negligence might arise out of a situation where a party/s might owe a duty of care to other parties, and if such a duty was owed, whether it was breached (that is, whether the tort of negligence (or breach of statutory duty) is applicable).

I've edited out the quote from your posting - if the answer to your (edited) query was in the affirmative, then a clear conflict of interest would arise, a situation quite troublesome for the parties you refer to. However, I've no evidence to support such a proposition.

re: Paragraph 2 - As I understood it, investors didn't cast a vote to Asgard - and yes, investors are entitled to bring proposals which cause the fund to lose (I posted that too). And, as posted, Trilogy achieving control of the fund did not give any advantage to taking over the LM FMIF (unless of course Trilogy is able to use the fund's resourses to spruik in its run for the fund - but that advantage would only be one for Trilogy - again, a cost to members on top of the .5% FUM management fee.).

To my mind, there is a simple reality, and that reality is, that on and after 19 October 2012, any reason/s that I would understand as being in the best interest's interests had dissipated - there could be only one entity which could possibly benefit from continuing along with the meeting, and that was Trilogy. There was nothing to stop the convening member pulling the meeting right up to the very eve of the meeting, perhaps later (anyone got more info on this point?).

re: Paragraph 3 - To my mind, it's the case that the meeting could not proceed without the support of the convening member (Convening Members' Agent Pty. Ltd.). So, an inquiring mind might ask "What is the basis for the convening member continuing along with the meeting after 18 October 2012?":

1. Reduced fees? No. in fact, it would result in increased fees.
2. A leg-up to take over the LM FMIF? No. In fact, LM had amended the fund's constitution so members would have a vote in the processs (something they didn't have at the last meeting).

Trilogy was the clear winner - something that could not have happened if the convening member discontinued along with the meeting.

The underlying problem, as I see it, is that members in the fund didn't have their say in the vote - if members of the fund chose the path, then so be it - but as I understand it, that wasn't the case. Again, I'm always happy to be corrected if I'm wrong.

I wonder what obligations (if any) Atchison has in relation to the report generated to support Trilogy's case, a report which is far from balanced and which falls way short of giving full disclosure about Triogy, in fact, as I read it, the report did not raise even one negative aspect in relation to Trilogy management history. Maybe ASIC might know more about this subject?

 

[Mysteryman]

Re: "The Devil's Advocate"

The underlying problem, as I see it, is that members in the fund didn't have their say in the vote - if members of the fund chose the path, then so be it - but as I understand it, that wasn't the case. Again, I'm always happy to be corrected if I'm wrong.

I wonder what obligations (if any) Atchison has in relation to the report generated to support Trilogy's case, a report which is far from balanced and which falls way short of giving full disclosure about Triogy, in fact, as I read it, the report did not raise even one negative aspect in relation to Trilogy management history. Maybe ASIC might know more about this subject?

True the investors in the WIMIF who had their monies invested through platforms like BT(Iselect wrap) and Asgard (referred to as platforms from now on) did not have the right to vote as individual investors.Those votes were used by the platforms to vote in favour of Trilogy.

According to LM:
"Out of the 237 investors in the LM Wholesale First Mortgage Income Fund, only five by number supported Trilogy, each making a unilateral decision in favour without any reference to or consultation with their underlying investors or advisers. "

So some or all of those five votes were sufficiently weighted by the fact that they represented many investors through various platforms to bring the votes in favour of Trilogy to over 50%. This, was as far as I am aware, without any consultation with the investors represented by these platforms and indeed in my case after informing them I did not want them to vote for Trilogy on my behalf.

So did the platforms take the Atchison report at face value and do no further research into Trilogy's past performance, which would appear to be negligence on their part, or do they have a reason, either clandestine or honourable, for voting in the way they did? An answer, even incognito or upfront on this site would be welcome.

 

[ASICK]

Crawfish Mentality

For Info of all- just had a call from Trilogy man- they will not give me the other Report that was written in support of them. It did however go to all the Main Finincial Planners groups, so if any body has a planner that has it then maybe it could be published here? ...

While watching the rain drops fall, a few thoughts come to mind about the so-called Jansen report.

1. I'm reminded he's a consultant at Trilogy:http://nz.linkedin.com/pub/david-jansen/43/6b8/bab
2. Jansen's report went to the main Financial planners
3. Trilogy wouldn't give Rodent a copy

Clearly investors are entitled to see such a document, after all, the document's intent was to unseat LM. Investors are entitled to know if it was just as lacking in research and as biased as Atchison's report. There is no reason it can't be published, after it, it can no longer constitute advice because the very reason for its production has now passed (the meeting is over) - the document now forms part of history, not advice about the future.

I think Trilogy is too shy to publish it in the light of day - just like it's too shy to disclose all the documents about the PMMMF and the Healthcare REIT on its website.

It very well could be the case that investors might be a tad smarter now, and when it comes to assessing whether a report being held out to support Trilogy is balanced and well-reseached, investor might just apply a simple litmus test, and the test might be:

"What is being disclosed about Trilogy's past associations (Laton Capital Group/Laton Corporate Finance) and Trilogy's management history in relation to the losses in the Trilogy PMMMF, Trilogy Heathcare REIT, and Trilogy Pacific First Mortgage fund?"
http://moneymagik.com/more_on_Trilogy_PMMMF.php (includes info about Laton Capital Group & Laton Corporate Finance)
http://moneymagik.com/analysis_REIT.php
http://www.moneymagik.com/

- and if the report doesn't mention every one of these four issues in detail, then the reader might say "This report is biased and/or poorly researched - it should be disregarded as being no more than a spruik"

And if it the case that if Trilogy thinks that LM FMIF members are now a tad smarter, Trilogy might be just that tad shyer in disclosing certain documents, for example, a document such as the Jansen report - (Jansen, the man down at Trilogy).

My view - Trilogy is shy to give you guys the report - Trilogy has adopted a crawfish mentality on Jansen and has withdrawn into its corporate "cave".

Investors are entitled to "see" what's on offer - if one was out to buy a robot, a broom dressed up in a garbage can just isn't going to fit the bill, is it?

 

[ASICK]

On the Down & Down

A PFMF unitholder reports that she received her PFMF fund update with junk mail enclosed.

The junk mail was a couple of fliers for Trilogy funds.

Come to the think of it, the .5% FUM ($350k per annum) might not be as attactive as having the ability to send out heaps of unsolicited junk mail attached to fund information to members of your fund.

Things must be on the down and down at Trilogy.

 

[ASICK]

Re: On the Down & Down

A PFMF unitholder reports that she received her PFMF fund update with junk mail enclosed.

The junk mail was a couple of fliers for Trilogy funds.

Come to the think of it, the .5% FUM ($350k per annum) might not be as attactive as having the ability to send out heaps of unsolicited junk mail attached to fund information to members of your fund.

Things must be on the down and down at Trilogy.

Here's an update on this issue:

http://moneymagik.com/trilogy_canberra_cbd_property_syndicate.php

 

[RODENT69]

Dear Mysteryman and ASICK

Mysteryman, you are on the ball, I agree that ASICK did a very good job of spelling out the timelines (calender of events) in his recent post #227. FYI please refer to my post #229 you will note the 237 Investor figure I quoted and the reference to it by LM in their correspondence.

I really wonder about this figure and will be writing today to my contact in LM about this figure, because as I said its the EXACT figure Asgard had previously advised me they had for their Investor numbers in the WFMIF.

Something is odd here, because if the 237 Investor Number is correct and Asgard said that it is their actual number, that can only mean that no other investors were involved in other Platforms for the WFMIF , and that cant be right?

Also re your postings #231 and #233. Asgard commissioned its own separate report, but as yet I dont know what else they used, Atchison or other. Hopefully when I get my formal reply from their Case Director to my complaint all the points I have listed for a detailed reply will be covered off in full.

Mysterman JFYI did you notice the reference in the latest communication from LM 16 Nov mentions in specie transfer possibility. I will ask LM to tell me who the Platforms that seek the instructions from their underlying investors actually as clearly Asgard and BT are not one of these.

Its past the middle of the Month, I wonder how close are the Audited Statements and RG 45 etc???

 

[Mysteryman]

Re #237

Yes I did see the mention about transferring my fund to another platform. I think it may also be possible, if your WFMIF is within a super fund to transfer the fund directly into your SMSF (if you have one) and thus eliminate the use of a platform ie Asgard, BT(Iselect wrap). I've still to check this out in detail. I want to make sure also that I don't get out of the frying pan and into the fire and incur further fees in transferring. Unfortunately, the move won't get me out of Trilogy's 0.5% fee umbrella but should allow voting rights in the main fund, which may prove useful in future.

Also your reference to a proforma doc in #220 - FYI I believe some of the signatures may be those of LM employees with investments through Asgard. I have no idea if it was actually sent to Asgard.

 

[RODENT69]

Mysteryman

More than 2 years ago I requested Asgard to Transfer my WFMIF assets from them to my own SMSF. The answer in simple terms was they had no systems functionality to allow this to happen. It could only be done by selling down the assets first and because the fund was frozen this sale could not happen.

However things may have changed by now, as they told me they were building the systems functionality to allow this to happen . I may be asking the in specie transfer question again in the near future, depending on how well they handle my complaint to the Trustee.

I have been advised by LM that Netwealth is a platform (Super Wrap) that seeks instructions from its investors. I can also confirm that LM has seen the so called Janson report, but were not aware that Asgard had commissioned its own report. Perhaps I will ask LM to give me a copy of the Janson Report ?

 

[ASICK]

The "Mexican Standoff"

Trilogy's shy to disclose the so-called "Jansen Report"

Dang, so is LM.

Who said Trilogy and LM didn't have anything in common?