LM Investment Management - Lack of confidence

am262327 · 16 June 2013

RODENT69 said:
If that's true, and actually happens then investors in this fund will achieve a much better outcome than others in the FMIF, Feeder funds and the MPF. I wonder how this is possible?

Is this because MPF is closer to the debt? When I bought I was under the impression that there were a number of properties held by the fund instead I find now that it vast majority was in the Maddison Estate. I was specifically looking for a conservative, near-term bet that wasn't based on stocks. Imagine my surprise to find that it has been structured the way it was.

I'm just really curious that if the outcome for those in the MPF looks so bleak, why aren't there more crying out in anger?? Maybe because we're all just waiting for the official word to come through?

ASICK · 16 June 2013

LM AIF

RODENT69 said:
re LM Australian Income Fund

On the FTI website under AIF is an interesting doc regarding this fund. Its an RG 45 Update and it covers both the fund update and the return of Capital Process

A statement in the doc is interesting it says that based on current assumptions for the fund a full return of Capital can be achieved by the 4th Qtr of 2014

If that's true, and actually happens then investors in this fund will achieve a much better outcome than others in the FMIF, Feeder funds and the MPF. I wonder how this is possible?

The AIF isn't a feeder fund to the LMFMIF: http://u.b5z.net/i/u/10199052/f/8974r20_AIF_RG_45.pdf

ASICK · 16 June 2013

MPF / FMIF / AIF

am262327 said:
... I'm just really curious that if the outcome for those in the MPF looks so bleak, why aren't there more crying out in anger?? Maybe because we're all just waiting for the official word to come through?

No outcry? What can they do? Maybe most MPF members don't even understand what KM has told them about "Maddison" - time will tell, reality will set in sooner or later.

I think the LMFMIF is better off, but it's still not a good look - time will tell.

Neither fund has anything to do with the LMAIF - there's no way that the AIF would have such a good outcome if it had been a feeder fund to the LMFMIF.

am262327 · 16 June 2013

Re: MPF / FMIF / AIF

ASICK said:
No outcry? What can they do?

I'm in the process of contacting lawyers. There just has to be something that can be done. Reviewing the sequence of events, it's clear to me that investors were misled and that negligence contributed to the loss of money. They publicly fought back against the meme that there wasn't any value in Madison and look at what we have here, the trustees saying just that. I just refuse to believe that I'm done.

ASICK · 17 June 2013

Loss is Difficult to Accept

am262327 said:
... I just refuse to believe that I'm done.

Yes, I know. Time will heal.

I'm sure KM will do all it can to recover what it's able to.

Please be careful about putting good money after bad. Remember, Piper Alderman's in there somewhere looking to get a slice of the action.

am262327 · 17 June 2013

Re: Loss is Difficult to Accept

ASICK said:
I'm sure KM will do all it can to recover what it's able to.

There isn't much (anything?) there to recover though, such was the state of affairs in the way the fund was structured. Last time I read through everything it seemed as if the plan to attract funding is really all about making sure that Maddison doesn't go into receivership, in hopes that you build it back up and then sell when it's maybe worth something. But don't those new investors have to pay off the $320 million loan, therefore making the bet that Maddison will someday be worth much more than $320 million?

ASICK · 17 June 2013

Re: Loss is Difficult to Accept

am262327 said:
There isn't much (anything?) there to recover though, such was the state of affairs in the way the fund was structured. Last time I read through everything it seemed as if the plan to attract funding is really all about making sure that Maddison doesn't go into receivership, in hopes that you build it back up and then sell when it's maybe worth something. But don't those new investors have to pay off the $320 million loan, therefore making the bet that Maddison will someday be worth much more than $320 million?

Good morning am262327, I think you should take the time to read KM's eighth update very carefully indeed.

The indicative proposal, which is a sure-fired one for KM and heaps of others (developers, facility lenders, partners, priority investors), is not so sure-fired for LMMPF investors. LMMPF investors will only get sprinklings (if anything at all).

Pre-existing investors (eg. you) are on the VERY bottom of a substantial drip feed. It might be worth while having a looking at the "4 Corners" episode re: the sales rate of land on the gold coast. The longer it takes to sell the subdivided land, the more $$$$ goes to all those further up the totem pole than yourselves.

http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm

RODENT69 · 17 June 2013

Re: LM AIF

ASICK said:
The AIF isn't a feeder fund to the LMFMIF: http://u.b5z.net/i/u/10199052/f/8974r20_AIF_RG_45.pdf

ASICK I am fully aware that AIF is not a feeder fund but a stand alone fund. I posted what I did so that others may be aware that an Updated RG-45 existed for that fund, so that investors in the fund could read it for themselves, and form their own conclusions regarding likely capital return.

After reading the interchanges between the ASIC and FTI's legal people in the latest postings at FTI , (commented on by several forum members) really hard going, I read the following on page 94 from FTI Legal Norton Rose Fulbright to ASIC -Copley

" FTI Fees as Administrators of LM are NOT payable by the FMIF but are recovered from the assets of LM itself

What do you suppose that means.

When FTI lost its recent court challenge re Korda Mentha/MPF the court awarded costs against FTI said to be about $500k. When I asked FTI where would that money come from they would not specify, but said it was less than that amount anyway!!

ASICK · 17 June 2013

Re: LM AIF

RODENT69 said:
... " FTI Fees as Administrators of LM are NOT payable by the FMIF but are recovered from the assets of LM itself."

What do you suppose that means.

A mere technicality Dear Rodent.

The fund ----> LM ----> FTI [technically FTI receives money from LM which in turn receives money from the funds]

Interestingly Trilogy spoke in similar turns, about a company (PSA) not receiving money directly from the fund but rather from a receiver to a fund security asset. Technically, PFMF ----> Receiver ----> PSA [and so it goes]

More importantly for LM fund members, is what LM expenses in relation to the meeting & litigation been repaid to LMIML by LM funds.

RODENT69 said:
When FTI lost its recent court challenge re Korda Mentha/MPF the court awarded costs against FTI said to be about $500k. When I asked FTI where would that money come from they would not specify, but said it was less than that amount anyway!!

From the judgment (as I understand it), FTI is to bear its own costs and can't recover from the fund - but it's probably open for them to charge the costs to LMIML as administration costs, which in turn (again, as I understand it), can't be recovered by LMIML from the fund.

in the end, it's not a concern for fund members because those costs won't be paid by LMFMIF members.

am262327 · 17 June 2013

Re: Loss is Difficult to Accept

ASICK said:
Good morning am262327, I think you should take the time to read KM's eighth update very carefully indeed.

I did read it, again and again, but it's like playing catch up to something I didn't understand in the first place while having my emotions clouding the ability to digest it all. I did understand that there are risks to be taken if I joined the NewCo venture but I'm not about to get intertwined into that... besides not having liquidity now. Now I understand what's in it for KM, though, because they are positioning themselves to reek the benefits of actually forming NewCo.

By the way, I received an email from KM saying they are contacting solicitors on a variety of matters. Do they have recourse to get refunds to investors by pursuing legal action, and if so, where does that money come from?

I think I should change my handle to something like 4phuksake.

ASICK · 17 June 2013

Re: Loss is Difficult to Accept

am262327 said:
I did read it, again and again, but it's like playing catch up to something I didn't understand in the first place while having my emotions clouding the ability to digest it all. I did understand that there are risks to be taken if I joined the NewCo venture but I'm not about to get intertwined into that... besides not having liquidity now. Now I understand what's in it for KM, though, because they are positioning themselves to reap the benefits of actually forming NewCo.

By the way, I received an email from KM saying they are contacting solicitors on a variety of matters. Do they have recourse to get refunds to investors by pursuing legal action, and if so, where does that money come from?

I think I should change my handle to something like 4phuksake.

am262327 (aka 4phuksake), I think you're getting the gist of it. While KM has spoken about the fact that there's really no guarantee for pre-existing investors in the indicative proposal limited explanation, they haven't spoken to how much they'll make out of it, either as KM or as a relative.

No individual investor would join NewCo as a shareholder - the fund would hold all or some of the shares according to the $$$$ amount of priority unitholders who might sign up for the deal via the LMMPF. If all of the shares in NewCo were held by the LMMPF, the value of that shareholding to pre-existing LMMPF members (as LMMPF unitholders) would be BEHIND the LMMPF priority unitholders (both for income and capital distributions).

I'd guess there's not too much left in the LMMPF and not too much in management fees for KM - if new punters (the priority investors) came into the LMMPF, then up goes the management fees in the LMMPF - then there's the directorships in NewCo, another fine source of income - and perhaps even more from other opportunities that arise.

All the while pre-existing investors would be hoping for just a few dollars falling past all the "fingers' above them on the distribution totem pole.

Would you mind posting the document you received from LM (if it isn't on LM's website)? It's not possible to comment on documents which aren't available.

Vibe · 17 June 2013

LM MPF

Dear am262327, may I ask who was your financial advisor in China? I done my investment with Equity Asia , however since weeks they are not replying or picking up the phones. It appears that they were operating in China illegally and misguiding investors that LM MPF is regulated by ASIC .. Which , what we learnt was not the case.furthermore ( as per my knowledge) LM didn't have any approval from Chinese authorities to sell their funds in China. I know that we have been stupid and naive to place the money into LM MPF ... But , I would like to ask ASICK if it make any sense to place any class action from China side against LM and advisors who were selling this product in China illegally ( it seems like one big mastermind Ponzi scheme)

am262327 · 18 June 2013

Re: LM MPF

Vibe said:
Dear am262327, may I ask who was your financial advisor in China? I done my investment with Equity Asia , however since weeks they are not replying or picking up the phones. It appears that they were operating in China illegally and misguiding investors that LM MPF is regulated by ASIC .. Which , what we learnt was not the case.furthermore ( as per my knowledge) LM didn't have any approval from Chinese authorities to sell their funds in China. I know that we have been stupid and naive to place the money into LM MPF ... But , I would like to ask ASICK if it make any sense to place any class action from China side against LM and advisors who were selling this product in China illegally ( it seems like one big mastermind Ponzi scheme)

I didn't use those guys, but it seems to me with that many things been done wrong it sounds like you have quite a lot of leverage to sue their asses off. Not sure how liable financial advisors are, though.

These are the two emails received from KM:

We will take action on behalf of all unit holders. We are already briefing solicitors on a number of matters. Accordingly, no specific action is required from yourself at his stage.

And

We are doing everything we can to maximise the return to unit holders. You should be aware from our reports we are aware and pursuing those related party transactions.

All investors, as individuals, can form a group or take legal action as they please. That is their inalienable prerogative under the Australian legal and democratic system. However doing so will be done at their own expense. However subsequent to our investigations, the trustee may decide in the future to undertake recovery action against
parties for the benefit of all unit holders. Please bear in mind the Court delivered us a mandate to protect and maximise unit holder value. Clearly any legal action that agrees to this mandate will be considered by the trustee.

ASICK · 18 June 2013

One Man's Journey

I received this in my morning delivery from Top Documentary Films - If readers have spare time, it's worth watching:

ASICK · 18 June 2013

Re: LM MPF

am262327 said:
I didn't use those guys, but it seems to me with that many things been done wrong it sounds like you have quite a lot of leverage to sue their asses off. Not sure how liable financial advisors are, though.

These are the two emails received from KM:

We will take action on behalf of all unit holders. We are already briefing solicitors on a number of matters. Accordingly, no specific action is required from yourself at his stage.

And

We are doing everything we can to maximise the return to unit holders. You should be aware from our reports we are aware and pursuing those related party transactions.

All investors, as individuals, can form a group or take legal action as they please. That is their inalienable prerogative under the Australian legal and democratic system. However doing so will be done at their own expense. However subsequent to our investigations, the trustee may decide in the future to undertake recovery action against parties for the benefit of all unit holders. Please bear in mind the Court delivered us a mandate to protect and maximise unit holder value. Clearly any legal action that agrees to this mandate will be considered by the trustee.

Yes, KM makes sense - after all, KM is in the best position to make decisions based on evidence, evidence that probably would not be available to a privately engaged lawyer. Please don't confuse mere loss with a cause of action.

Another point, KM is independent to LMIML.

It might be a good idea for you to go back and read all the previous updates from KM - and if I may suggest, read each of them as many times as it takes to fully understand the contents of all of them.

I hope KM brings an action/s with fund resources so there's no need to engage a class action lawyer/litigation funder - after all, you've lost enough already: There's no point giving up a substantial slice of any litigation proceeds if it's not absolutely necessary.

However, giving it some thought, KM may not take an interest in financial advisors - that is any area which you might have to get together with other clients of your particular advisor and together, head off to get some legal advice.

KM says that it would bring actions for the benefits of all investors - to my mind, that's not going to include any actions against various financial advisors.

I wonder, have you asked KM about the potential liability of your financial advisor? or about the liability of financial advisors in general?

am262327 · 18 June 2013

Re: LM MPF

ASICK said:
I wonder, have you asked KM about the potential liability of your financial advisor? or about the liability of financial advisors in general?

I've just emailed KM asking just that. I also have copies of the contract (signed with the financial planner) that I signed and the Information Memorandum (written by LM) that the contract references. There is never any mention about the kind of loss I'm preparing for:

"Capital Risk
The investments of the Fund are not capital guaranteed, and there is a risk that the value of the investment might decline. No losses have occurred, or are expected to occur at the date of this Information Memorandum."

The other delineated potential risks are things like currency risk, property market risk, etc.

I could easily set up a website in order to find other investors who used the same financial planners, and thereafter engage a lawyer respectively.

ASICK · 18 June 2013

Claims Against Directors

http://www.jonesday.com/class-action-drivers-in-australia-do-insurance-and-access-to-deep-pockets/

"Claims Against Directors

Central to the applicant's reasons for seeking a discontinuance was that the directors' and officers' liability policy which responded to the claims was capped at a confidential figure but that the policy was, or would soon be, exhausted.

The policy had been used to meet defense costs of the settling respondents in defending the present proceedings. The policy also responded to other claims, including a civil penalty proceeding brought by the Australian Securities and Investments Commission in the Supreme Court of Queensland against three of the settling respondents. Consequently, upon the basis of estimates of anticipated future legal costs, no insurance moneys were expected to be available to meet a judgment in the current proceedings. Further, evidence established that each of the settling directors had insufficient assets to meet a judgment."

am262327 · 18 June 2013

Re: Claims Against Directors

ASICK said:
http://www.jonesday.com/class-action-drivers-in-australia-do-insurance-and-access-to-deep-pockets/Central to the applicant's reasons for seeking a discontinuance was that the directors' and officers' liability policy which responded to the claims was capped at a confidential figure but that the policy was, or would soon be, exhausted."

In other words, that's another protection out the window.

ASICK · 18 June 2013

Re: Claims Against Directors

am262327 said:
In other words, that's another protection out the window.

The MFS PIF class action sued a number of MFS directors - IMF was the litigation funder.

The insurer advised the court that certain court costs had reduced the insured amount to such an extent that there wouldn't be any monies available to satisfy a judgment. Given the directors had no assets, IMF discontinued because there was no $$$$ to recover from either the directors or the insurer.

After spending $2m on the public examination of certain individuals relating to losses in Trilogy's PFMF, IMF pulled out and did not contribute to the present Federal Court proceedings against certain Citypac officers and directors. Trilogy battles on: http://moneymagik.com/federal_court_litigation_comment.php

Each fund's fact scenario is different - the MFS case highlights that there isn't always a benefit from suing directors (even with insurance). My guess is that the PFMF Federal Court matter will fall on barren ground in a somewhat spectacular and costly fashion.

RODENT69 · 18 June 2013

Re next Capital Distribution from LM to investors in the FMIF and Feeder funds

FTI has published the CPU figures for these funds on its website today.

FMIF and the CPAIF = 0.0079 CPU
ICPAIF = 0.0059 CPU

The actual CPU for WFMIF figure will come after Trilogy discloses it, but the GROSS amount that Trilogy is receiving this time is $844,695.05

The Trilogy Figure for Units held in the WFMIF is 89,722,301

LM Investment Management - Lack of confidence

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