LM Investment Management - Lack of confidence

[Taja]

I am a UK national resident in Thailand who was persuaded by a financial advisor to invest a substantial sum into LM's FMIF back in the sun-filled days of early 2008. Like everyone else I am awaiting pessimistically the outcome of the voluntary administration process and wondering what - if anything - individual investors such as me can do. Grateful for any advice, and also answers to two specific questions:

- Can someone in my position join in one or both of the class action suits which I understand are being pursued by the Australian law firms Piper Alderman and Slater & Gordon ?
- I would be very keen to talk to other fellow victims also resident in Thailand - does anyone know if it is possible to obtain a list of investors by country of residence?

Advice much appreciated - many thanks.

 

[No Trust]

Peter Drake pops up in the SMH article below... He is mentioned amongst some interesting company...

The media have really shone a spotlight on this collapse...

http://www.smh.com.au/business/sun-setting-on-fraud-capital-of-australia-20130329-2gz30.html

 

[mapc]

http://www.canberratimes.com.au/business/lm-windup-misses-investors-20130326-2gs81.html

For those interested this article appeared a couple of days ago and mentions possible plans by FTI to hand back control to LM management and the need for additional finance, ideally from Deutsche bank

 

[Taja]

http://www.canberratimes.com.au/business/lm-windup-misses-investors-20130326-2gs81.html

For those interested this article appeared a couple of days ago and mentions possible plans by FTI to hand back control to LM management and the need for additional finance, ideally from Deutsche bank

Read more: http://www.smh.com.au/business/lm-windup-misses-investors-20130326-2gs81.html#ixzz2PCLuK96e

Thanks for drawing our attention to this.

What seems to me to be worrying is the statement in this report by FTI's Ms Muller that "financial advisers may be creditors of LM Investment Management because they are owed commissions for putting clients into the company's funds". If I understand correctly, this could mean that if/when it comes to winding up, the pot of net realisable LM FMIM assets to be distributed to investors could have been reduced by a further 5-10% (these are the levels of commissions promised to financial advisors that I have seen quoted in various reports). This seems to be pretty unfair given the lack of proper due diligence by many of these same advisors in their recommendations to would-be investors.

Grateful for views as to (a) whether this concern is justified and (b) what investors can do about this.

Regards to all.

 

[Taja]

Read more: http://www.smh.com.au/business/lm-windup-misses-investors-20130326-2gs81.html#ixzz2PCQAUh4F


Thank you mapc for drawing attention to this article

What concerns me is the quote in the article that "Ms Muller (of FTI) told the financial advisers they may be creditors of LM Investment Management because they are owed commissions for putting clients into the company's funds". If I understand this correctly it could mean that - if/when the LM Fund is wound up - the pot of net realisable assets to be distributed to investors could be reduced by 5-10% (that is the level of commissions reportedly offered to financial advisors according to several reports). Given the sloppy due diligence work done by many such advisors - perhaps encouraged by such juicy commissions - this seems to be adding insult to injury for the investors.

Grateful for views as to (a) this concern is justified and, if so, (b) what we investors can do about it.

Regards.

 

[ASICK]

FTI

http://beta.afr.com/p/business/property/fti_seeks_lm_receiver_role_over_CHwCNlfRHAgBAUPA3ZwLxN

"FTI Consulting is set to apply to the Queensland Supreme Court to be installed as receiver of LM Investment Management’s controversial $401 million property fund."

and who could blame them? after all, there's a bag full of $$$$ on offer ....

Rumours ..

... a potential filing for bankruptcy
... the potential loss of a beautiful abode

Update:
http://www.propertyobserver.com.au/...ce=po&utm_medium=aida&utm_campaign=latestnews

 

[No Trust]

Re: FTI

Wow looks like the last of the Gold Coast Ego Maniac Mortgage Fund Managers is about to disappear...

Same traits same penchant for beachfront houses... Are these guys lacking in other departments to have to display these symbols of their alleged success ??? Look like a bunch of small willy's now...

http://beta.afr.com/p/business/property/fti_seeks_lm_receiver_role_over_CHwCNlfRHAgBAUPA3ZwLxN

"FTI Consulting is set to apply to the Queensland Supreme Court to be installed as receiver of LM Investment Management’s controversial $401 million property fund."

and who could blame them? after all, there's a bag full of $$$$ on offer ....

Rumours ..

... a potential filing for bankruptcy
... the potential loss of a beautiful abode

Update:
http://www.propertyobserver.com.au/...ce=po&utm_medium=aida&utm_campaign=latestnews

 

[Taja]

Thank you ASICK for this link.

As a new member of this Forum I have been very grateful for the numerous earlier posts that you - and others such as DINGA (who generously took the initiative to actually start the Forum to bring people together) - have made. Like countless others I just wish I had been more alert to all these sorts of issues before investing in LM.

Any thoughts as to my earlier post/query re. financial advisors being treated as creditors .. ? Or are their commissions just breadcrumbs when set alongside the other losses from the fund ?

Thanks and regards.

 

[Taja]

Re: LM Investment Management - Registry Request

Well Thomas, I am..... picked up the USB stick apparently containing both FMIF and CPAIF registers of members, without any further unnecessary hindrance from LM.

Have only had a very cursory look, but was shocked (when really I shouldn't have been - since the Federal Court noted there were a large number of elderly investors in FMIF) to see a large number of listings of deceased estates. Let's hope there are not very many more of us in that category before we can retrieve at least some of our monies...

Will be having a much better look over the weekend, to see how best I can try to facilitate the networking between we poor investors, and the development of options/consensus on how best to proceed to maximise the chances.

As always, really welcome the benefit of the experience of folks who have trod similar, unfortunate paths....

Dear Dinga -

First, a note of appreciation for your having set up this Forum which I only recently discovered and for the very informative posts by you and others over the past months. I am also an investor in the LM FMIF (I invested in the sunny days of early 2008) and still have much to learn. Like everyone else I am gloomily awaiting the outcome of the voluntary administration process and wondering what - if anything - investors such as myself can do to move things in the right direction.

Then a request. I am a UK national resident in Thailand and would be keen to contact any fellow investors also here in Thailand. You mentioned having acquired the register of all investors - is here any way you can send me the sub-list of those in Thailand (I am assuming there are quite a few others here, given the activities of several financial advisors in Bangkok) .. ?

Much appreciated and many thanks again.

 

[No Trust]

From today's media reports nationally it looks like where there was smoke there is now fire... What is wrong with these guys and Related Party transactions. Have they not heard of arms length transactions ??? The Gold Coast is a joke as were the cliche beachfront mansions bought with other people's money...

By the way what were Drake's academic qualifications...

 

[ASICK]

Advisors - Questions

Thank you ASICK for this link.

As a new member of this Forum I have been very grateful for the numerous earlier posts that you - and others such as DINGA (who generously took the initiative to actually start the Forum to bring people together) - have made. Like countless others I just wish I had been more alert to all these sorts of issues before investing in LM.

Any thoughts as to my earlier post/query re. financial advisors being treated as creditors .. ? Or are their commissions just breadcrumbs when set alongside the other losses from the fund ?

Thanks and regards.

Hi Taja,

It seems the advisor commissions are/were drawn from the fund. See 2012 financials page 8 ($2,165,236 paid), and page 18 (note 2(I) - commission may be paid).

However, as a guess, any legal obligation to pay advisors might arise out of an agreement between LMIML and the advisors (with the $$$ drawn by LMIML from the fund as authorised by the PDS).

From today's media reports nationally it looks like where there was smoke there is now fire... What is wrong with these guys and Related Party transactions. Have they not heard of arms length transactions ??? The Gold Coast is a joke as were the cliche beachfront mansions bought with other people's money...

By the way what were Drake's academic qualifications...

http://www.heraldsun.com.au/news/ad...an-to-lm-founder/story-e6frf7jo-1226611230010

http://www.smh.com.au/business/related-party-loan-link-probed-in-failed-lm-fund-20130402-2h53o.html

"LM Investment Management, had not resigned as trustee of the fund, despite a provision in the fund constitution stipulating it must do so upon the appointment of administrators. He denied it would be a conflict of interest to be appointed as both receiver of the fund and administrator of LMIM." (emphasis added)

Ah, the fresh aroma of $$$$$s wafting gently thru the air.

 

[Taja]

Re: Advisors - Questions

Hi Taja,

It seems the advisor commissions are/were drawn from the fund. See 2012 financials page 8 ($2,165,236 paid), and page 18 (note 2(I) - commission may be paid).

However, as a guess, any legal obligation to pay advisors might arise out of an agreement between LMIML and the advisors (with the $$$ drawn by LMIML from the fund as authorised by the PDS).



http://www.heraldsun.com.au/news/ad...an-to-lm-founder/story-e6frf7jo-1226611230010

http://www.smh.com.au/business/related-party-loan-link-probed-in-failed-lm-fund-20130402-2h53o.html

"LM Investment Management, had not resigned as trustee of the fund, despite a provision in the fund constitution stipulating it must do so upon the appointment of administrators. He denied it would be a conflict of interest to be appointed as both receiver of the fund and administrator of LMIM." (emphasis added)

Ah, the fresh aroma of $$$$$s wafting gently thru the air.

Dear ASICK -

Thanks again for the thoughts and the links. The SMH article link suggests that financial advisors may still be "owed" some $ 9.9 million on top of the $ 2.165 million already paid out, which you refer to. I still find it hard to accept that promises by LM to these advisors (even via written agreements with LM) for % commissions still places them in the category of "creditors", with the priority claim on funds that being a "creditor" entails. Surely to be a creditor you have had to have lent something .. But then I have been very naive so far and still have a great deal to learn about this murky world.

On another issue - I had asked DINGA is could share the register list of investors (he mentioned having got hold of this some months ago, last year). I would be keen to try and contact fellow investors here in Thailand. Any chance you might have this and be able to share?

Thanks and regards.

 

[ASICK]

Re: Advisors - Questions

Dear ASICK -

Thanks again for the thoughts and the links. The SMH article link suggests that financial advisors may still be "owed" some $ 9.9 million on top of the $ 2.165 million already paid out, which you refer to. I still find it hard to accept that promises by LM to these advisors (even via written agreements with LM) for % commissions still places them in the category of "creditors", with the priority claim on funds that being a "creditor" entails. Surely to be a creditor you have had to have lent something .. But then I have been very naive so far and still have a great deal to learn about this murky world.

On another issue - I had asked DINGA is could share the register list of investors (he mentioned having got hold of this some months ago, last year). I would be keen to try and contact fellow investors here in Thailand. Any chance you might have this and be able to share?

Thanks and regards.

Good afternoon Taja,

I'm not an investor in any LM funds - consequently, I don't have any interest to access the registry.

The $2m I quoted from the accounts only represented 2012, I don't have access to LMIML's accounts so I have no idea of the final amount owing (if any) to advisors.

You might find some reluctance for a fund member to pass along a copy of the register, however, you shouldn't have any problems receiving one from FTI since they're in control at this time (there may be a cost for a copy).

 

[RODENT69]

For the interest of others, this is the reply I received from FTI re what is a creditor

This is what I asked - I am advised that you consider Investors such as myself NOT CREDITORS, given the definition in the ASIC Doc I find this difficult to understand.

Specifically I have applied for a Redemption in 2008 and along with many thousands of other similar Investors we have requested our money back. If that does not fits the ASIC definition I don’t know what does

I fully understand that DB etc are Creditors , but most of the money that LM has is Investors money NOT so called creditors. At last check DB was owed only $25 -29Mil . Investors are owed Hundreds of Millions in Redemptions.

A detailed explanation is requested re why you do not consider Investors as Creditors is requested please


This was the reply

In regards to your enquiry as to why investors are not considered creditors I advise that this is because redemption claims and claims for principal and interest investments in funds are equity in nature and therefore do not carry voting rights at a meeting of creditors. The exception to this is if an investor can prove that they have a claim for breach of trust or misleading and deceptive conduct or the like against LMIM. This claim must be able to be quantified.

In the case of why a Financial Advisor is a creditor, maybe no more complex than they have provided a service to LM in exchange for a payment from LM ie a Percentage of the clients business they sign up

 

[ASICK]

For the interest of others, this is the reply I received from FTI re what is a creditor

This is what I asked - I am advised that you consider Investors such as myself NOT CREDITORS, given the definition in the ASIC Doc I find this difficult to understand.

Specifically I have applied for a Redemption in 2008 and along with many thousands of other similar Investors we have requested our money back. If that does not fits the ASIC definition I don’t know what does

I fully understand that DB etc are Creditors , but most of the money that LM has is Investors money NOT so called creditors. At last check DB was owed only $25 -29Mil . Investors are owed Hundreds of Millions in Redemptions.

A detailed explanation is requested re why you do not consider Investors as Creditors is requested please ...

Respective investors in the LM funds are the OWNERS of the respective LM funds in which they invested. The LM funds are REGISTERED SCHEMES, or BUSINESSES in their own rights. Each scheme is run by a responsible entity, the entity RESPONSIBLE for each scheme.

I think about members in such schemes as being a collection of investors packed up neatly in a little box, and that little box is tucked neatly inside the responsible entity's corporate "pocket".

The responsible entity is a SEPARATE business to each scheme, as is each SCHEME from the others.

Money owed to/by the scheme is NOT owed to/by the responsible entity, and visa versa.

The responsible entity acts ON BEHALF of (or FOR) the members of the scheme (or, on behalf of, or for the scheme).

Redemptions are payable FROM the scheme BY the responsible entity.

Investors in LM schemes are NOT creditors of LM unless there is a quantifiable claim/s against LM by the scheme (or all or some of those investors) by way of a breach of legal obligation.

As OWNERS, investors in managed schemes are LAST in line - managers, receivers (to assets, if any), accountants, auditors, lawyers, rates, land tax, landscapers, gardeners, etc. all get paid - then, whatever is left over, investors get the remnants - the dregs.

Don't be surprised if the real outcome for LM investors is way, way down under $0.20/unit.

 

[Titinet]

Re: FTI

Dear all,

I'm one of the poor foreign investors in LM performance fund. Who can tell how many investors we are in this fund? Apparently, the creditors, advisors (who advised us to invest in this fund) benefit from a priority over the others (investors). There are meetings planned with creditors not with any of us by FTI. Who can help us to defend our interest? How can we get together and represented by an association based in Australia? I think that it's important to be heard...

Titinet

 

[ASICK]

Re: FTI

Dear all,

I'm one of the poor foreign investors in LM performance fund. Who can tell how many investors we are in this fund? Apparently, the creditors, advisors (who advised us to invest in this fund) benefit from a priority over the others (investors). There are meetings planned with creditors not with any of us by FTI. Who can help us to defend our interest? How can we get together and represented by an association based in Australia? I think that it's important to be heard...

Titinet

sorry to butt in again - but - the creditors are the creditors of LMIML, not the LM funds - LMIML is a separate entity to the funds. The LMIML creditor advisors are not creditors of the LM funds. However, in saying that, as at 30 June 2012, advisors still received over $2m from the LMFMIF.

Maybe the question to ask FTI is "Will LMIML continue to draw monies to be paid to advisors?".

LMFMIF investors (and other fund investors) will stand last in line to ALL other creditors of the respective funds. These lines are different to the creditor line for LMIML.

We learnt that investors stand last in line way back in 2008.

 

[Taja]

Dear ASICK –

Luck you that you are not an investor – shrewder than some of us.
Thanks for your helpful definitions of the various terms, and clarifications re. LMIML creditors, etc.. Your sober view of the prospects for “last in line” investors is of course pretty depressing.

Note your point about possible reluctance of investors to share something like a register of all investors (though DINGA had earlier seemed to suggest he would share with others – but he seems to be offline these days). I will therefore try via FTI and keep people informed.

Dear RODENT –

Thanks for the helpful info re. FTI’s response in regard to what it means to be a creditor. Needless to say I entirely agree with you that, morally if not legally, investors such as ourselves (and especially those of us who have been claiming redemption for years now) would seem to have a better claim to be viewed as creditors.

Dear Titinet –

As I noted above, I will try and get a list of investors and let you know. Like you, I am outside Australia (a UK national living in Thailand) and I am especially keen to hook up with others – especially those who may have been “persuaded” by the same Bangkok-based financial advisor (who assured me that LM was “bank-like”, solid, v low risk, and all the rest – all of which I bought like a child).

In regard to pressing our collective interest – given our absence from the meetings being run by FTI and general lack of any voice for investors – please note that at least two Aussie law firms are on the case: Piper Alderman and Slater & Gordon. I am trying to talk to them to see (a) what line they will be taking and (b) what they can do for non-Australians such as ourselves. Will post anything I hear.

Regards to all from Thailand.

 

[Garpal Gumnut]

I lost what then was a great deal of money thirty years ago, in a similar scam.

My advice to you LM guys is to wave it goodbye, and move on, and eventually get over it.

It may take a few years.

And you may never get over it.

But you were muppets to invest in it.

And I was then.

And I recovered.

Recognising that it was YOUR mistake is the first step to recovery.

gg

 

[ASICK]

... As I noted above, I will try and get a list of investors and let you know. Like you, I am outside Australia (a UK national living in Thailand) and I am especially keen to hook up with others – especially those who may have been “persuaded” by the same Bangkok-based financial advisor (who assured me that LM was “bank-like”, solid, v low risk, and all the rest – all of which I bought like a child).

In regard to pressing our collective interest – given our absence from the meetings being run by FTI and general lack of any voice for investors – please note that at least two Aussie law firms are on the case: Piper Alderman and Slater & Gordon. I am trying to talk to them to see (a) what line they will be taking and (b) what they can do for non-Australians such as ourselves. Will post anything I hear.

Regards to all from Thailand.

Don't think too much about litigation - my guess is there's nothing to get from LMIML, especially since there's no directors' indemnity insurance. These "ambulance chaser" lawyers are only useful if there's a "pot of gold" at the end of the "rainbow". Funds like the LMFMIF were set up pursuant to laws "wide enough to drive a truck thru" so I'd be surprised if advisors won't be found wanting.

Taja, losing in the PFMF was enough for me - you're not alone with your losses.

GG is right about acceptance of loss. I get the impression that reality is starting to set in for many LM investors. It'll be good if the LM funds are wound up by a receiver - sure, they're big fee grabbers, but nothing like a manager gouging a fee based on a dream-like fund value which will be unlikely to be recovered by investors.

Receivers force reality on investors - see Equititrust:
http://www.smh.com.au/business/equi...rs-to-lose-close-to-90-pc-20130107-2ccqz.html

I'm sure if a manager was in control of Equititrust's fund then the report would be filled with optimism.

The only thing that matters now is how much is fed back into investors' pockets - nothing else matters.