LM Investment Management - Lack of confidence

[PJSUAE]

Re: LM MPF

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.

BTW, has anyone got copies of KM updates 5 thru 8? They seem to be classified as "commercially in confidence" and have been withdrawn from the website. Is this normal?

 

[ASICK]

The Proverbial "Closing the Barn Door After ..."

BTW, has anyone got copies of KM updates 5 thru 8? They seem to be classified as "commercially in confidence" and have been withdrawn from the website. Is this normal?

The link from Gismo's post # 795 still loads up the eighth update - if the links on the LM investor page on KM's site are gone, the documents certainly aren't. If you use a similar pattern with Google search (ie, same link with different update number) you'll probably be able to bring up the rest of them.

I'm surprised that commercially sensitive documents (as they're now called) remain on KM's site without any protection whatsoever. No need to go thru the index page and give an undertaking. If you want it, you'll have to grab it quick before KM wakes up.

 

[ASICK]

"Maddison": The Ellusive Dream?

The "4 Corners" episode, "A Betrayal of Trust", at about 34:12.

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

In the interview, the Brisbane-based Gold Coast specialist with Colliers international said "the market is currently trading at 35% of the ten-year average in terms of volumes of land sales across the Gold Coast"

The episode stated that there were 800 land sales across the entire Gold Coast during the 12 months preceding the episode and that there were 800 lots in "Maddison".

Collier's specialist said it would be "unusual for a single development to achieve a market share greater than 8% to 9% - 10% would be outstanding." He added, "in the current market to achieve 60 sales (per annum) would be very good indeed".

And, as the episode says, "It might be a long time coming", so without regard to any other variable, the longer any development drags out, the greater the costs of keeping the whole show afloat.

I might have missed it, but I don't recall reading any of this publicly disclosed information in KM's eighth update to investors.

 

[ASICK]

"In Confidence"

http://www.goodreturns.co.nz/article/976500973/one-of-lm-s-biggest-assets-worthless.html

Google turned up update 5:
[Google search =
https://www.google.com.au/#q=kordam...n.2,or.&fp=e0d5d32b4e4c3dbd&biw=1920&bih=911]

http://www.kordamentha.com/docs/au_109_lm/fifth-update-to-investors.pdf?sfvrsn=2

http://www.propertyobserver.com.au/...led-$15-billion-maddison-estate/2013061660656

Good old Google: https://www.google.com.au/#sclient=...78,d.dGI&fp=e0d5d32b4e4c3dbd&biw=1920&bih=911

 

[am262327]

Re: "Maddison": The Ellusive Dream?

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

I noticed that there is movement for class action against financial advisors. I contacted this Slater & Gordon firm that apparently is pursuing this.

http://www.slatergordon.com.au/media/news-media-releases/LM-Investments-Clock-Ticking

I haven't heard anything though.

 

[ASICK]

"Commercial-in-Confidence"

shhhhh ... don't tell anyone ...

http://www.stuff.co.nz/business/industries/8796608/Another-hit-for-frozen-mortgage-fund

 

[am262327]

Reported to ASIC

It took a few days, but after submitting my complaint to ASIC they got back to me. I've provided them all the documents and emails that I could. The basis of my complaint is that it was sold to me as a low-risk, conservative fund to invest in when in fact it's clear now that this was never the case.

I have to wonder how difficult it would be to prove this in court, though. I realize ASIC probably won't go after my individual claim, but hopefully the information will be helpful to their going after LM for all unit holders.

Or am I just holding my breath?

 

[ASICK]

Re: Reported to ASIC

It took a few days, but after submitting my complaint to ASIC they got back to me. I've provided them all the documents and emails that I could. The basis of my complaint is that it was sold to me as a low-risk, conservative fund to invest in when in fact it's clear now that this was never the case.

I have to wonder how difficult it would be to prove this in court, though. I realize ASIC probably won't go after my individual claim, but hopefully the information will be helpful to their going after LM for all unit holders.

Or am I just holding my breath?

No, you're not "holding your breath", you're actually doing what you can - and that's the best you can do.

As you're aware, ASIC isn't a prudential regulator - ASIC isn't bothered by outcomes, providing such outcomes are lawful. ASIC doesn't care if a manager loses some or all of investors' money in an investment/s. http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

I think you've done what you can - you can only put your case to ASIC and hope that the person who assists you really cares and gives you the best he/she is able to.

It's very difficult to progress alone - I still maintain that the greatest hurdle for investors in badly damaged managed funds to overcome is the lack of cohesion amongst the investors themselves

Why don't you post the name of your financial advisor? If other readers invested in LM thru that same advisor, then they'll be able to get in contact with you privately. Otherwise, how would you know who followed the same path to LM as you did?

 

[am262327]

Re: Reported to ASIC

It's very difficult to progress alone - I still maintain that the greatest hurdle for investors in badly damaged managed funds to overcome is the lack of cohesion amongst the investors themselves

Why don't you post the name of your financial advisor?

I used Scigroup (http://www.scigroup.org) I'm open to being contacted privately if you went through the same path.

 

[am262327]

Re: Reported to ASIC

I used Scigroup (http://www.scigroup.org) I'm open to being contacted privately if you went through the same path.

Although I have to point out that from what I've seen from them and from my own records, and from records provided to me, that this group did its due diligence. So I'm of the position that it was LM who were aggressively selling it. That doesn't mean that these financial advisors were unbiased, but I knew that. I knew they were getting a commission, et cetera.

 

[PJSUAE]

Re: LM MPF

This may well be of interest. Today I received an update from my IFA and the associated ACI. The update contained a report by the ACI covering the meetings they had with all parties, presumably with the man himself (PD).

Additionally, my IFA (Mondial Dubai) is proposing an interesting next step, which is aimed at buying out Suncorp's first mortgage, ironically asking us to stump up more cash. Any thoughts?

"Immediate Next Steps

The immediate call is to resolve the loan repayment of some AUD20 million to SunCorp, a large Brisbane based bank, that falls due on 30 June 2013. This date has been known to LMIM for one year and may have contributed to seeking insolvency protection. The loan is secured on the largest asset, the Maddison project, and a forced sale would likely result in lower value than an orderly development with a third party.

As a consequence, we wrote to you that we suggest that investors should agree to provide some additional 10-15% of their LMIM investment to allow the ACI to negotiate with SunCorp for a commercial resolution. We received favorable reactions so far. Our preferred approach is to buy the first mortgage on the land and first charge on all assets of the land owner company through a new legal entity or a Trustee. Korda, the fund manager, has equally proposed additional funding but through the MPF vehicle. We do not think that this a secure or appropriate avenue – a dedicated vehicle under the sole control of investors seems highly preferable and legally protected. We are taking legal advice.

We hardly have a choice – if the loan is not repaid, the likelihood is that SunCorp will force sale the land. The resulting proceeds could be very low indeed, it is a big risk. The law is on their side and we do not see any effective legal challenge to prevent their action. On the other hand, if we raise some funds, we have a negotiating position and can propose a purchase, a phased pay out, a stand still or any other form of extension that would give Korda, the fund manager, time to conclude a joint development agreement on more favorable terms with a major property developer in Australia. SunCorp is willing to consider proposals but we need to know if we have funds.

We will provide you with an outline of the proposed approach by the end of this week (22 June) and will ask you for commitments by 27 June to allow us to negotiate before the end of June."

 

[am262327]

Re: LM MPF

This may well be of interest. Today I received an update from my IFA and the associated ACI. The update contained a report by the ACI covering the meetings they had with all parties, presumably with the man himself (PD).

I think the only thing that made me feel better is that, yeah, they do seem well on top of it, and talk about personal bankruptcy for Peter Drake. And clearly there is not much in our favor, including assets and time.

 

[ASICK]

Opportunity

... We will provide you with an outline of the proposed approach by the end of this week (22 June) and will ask you for commitments by 27 June to allow us to negotiate before the end of June."[/I]

"The ACI is being formally established with representation from several offshore Independent Financial Advisory (IFA) firms and legally advised by Shane Roberts (Holman Webb), an experienced commercial litigation lawyer. Only IFAs will be allowed as members.", all, it seems, with "no skin in the game", and fees too .. or, are they working for nothing?

"This avoids new management fees and a mingling of old and new investment." - yes, it does, but the management of ACI hasn't disclosed that they'd be working for nothing, and I'd be surprised if they were working for less than a handsome prize.

"ACI members would act as the board and provide a check and balance of Korda efforts.", and of course, since investors have no more control over ACI than KordaMentha, where's the benefit of having ACI in the mix? I don't see one.

"It also gives investors the strongest voice in evaluating proposals." - isn't it 50 of one, or 50 of the other? - KordaMentha or ACI? there's no investor representation on either. Seems to me that ACI takes investors no where from where KordaMentha takes them: but then, you can't blame lawyers and advisors for wanting to make $$$ from an opportunity.

"The first mortgage position looks fairly secure since the land should under most any circumstance yield close to the value of the mortgage – depending on any reduction SunCorp may agree to.", SunCorp agree to a reduction? Wait, is that pigs I see flying backwards?

"The main objective of the ACI is to have a voice in legal proceedings but also to motivate, energize, monitor and foster the work of FTI and Korda, possibly the government.", oh, dear, "a voice in the legal proceedings", that's nice.

It seems to me that it is the interested parties (not investors) who will comprise ACI are certainly setting themselves up with an opportunity, and investors should NOT think otherwise, this is a NEW INVESTMENT OPPORTUNITY, with (as I understand it), the same advisors who led investors to LM's door in the first place.

As I understand it, ACI (with the interested parties as its board) proposes to buy the First Mortgage from SunCorp, yet is still bothered with dealing with KordaMentha - that's a tad odd to me. Why wouldn't the entity simply buy out the first mortgage (for the same money) and go about its business for the sole benefit of the new investors? Why share anything with anyone?

It seems to me that it'd make sense for pre-existing investors who want to re-invest in this new venture to share ALL the profits amongst themselves, rather than see a spill over of surplus profits (if any) to pre-existing investors who don't contribute in the new venture.

I wonder, why share?

If ACI bought the first mortgage, and "Maddison" remained a MPF loan (with second mortgage), how would the existing fund support the management fee? and if no longer a fund loan security asset, what's the motivation for Korda to keep the fund going?

The MPF fades into the distance, yet all eyes continue to be firmly focused on "Maddison".

As a siren calls from the deep, so does "Maddison" creak and groan, "more, more, more, bring your $$$$$s"

 

[am262327]

4phucsakes

All parties are investigating but even with the benefit of hind sight, there is no clarity on how this went largely undetected. The developments towards the latter part of 2012 and early 2013 came far too late for any investor to react since most investors were locked into one, two and three year terms and pending redemptions were slow.
In fact, the inflow of fresh investor money allowed LMIM to continue. To this effect, presumably interest payments (for the regulated FMIF schemes) were made from new investor monies and the MPF (unregulated scheme) provided development finance for FMIF. This will all be clarified by the investigation.

My read of this is that there were two primary "calculations" in the value of the fund:

*) Future "on-completion" value
*) Further monies coming in from investors

This is the thing: How is this a "low-risk" scheme? It's actually high-risk, because there is not an infinite number of investors and loans accrue interest and the property which the loans sit on may go down in value, and probably won't go higher than the interest.

 

[Loiner]

Re: Opportunity

"Only IFAs will be allowed as members.", all, it seems, with "no skin in the game", and fees too .. or, are they working for nothing?

"

'Only IFAs allowed as members.' This rings alarm bells with me.
Remember: They are the ones who got us into this mess in the first place.

I don't think they will be doing any of this for nothing. While they probably all had hefty up front commissions, they must also have some commission while their investors remain in the fund, or at roll overs. I don't know their agreements but can't believe otherwise. Their interests are therefore similar to the REs, in 'We must protect the funds at all costs.'

If IFAs don't want funds to be wound up, or receivers appointed, I'm sure this is only to prolong the running of their gravy train.

Does anyone know what IFAs commissions would be calculated on? Would it be the original $$$$ invested, or on the current units values? Even the latter is still a huge value for not actually doing anything. I think that's their incentive for setting up their ACI.

 

[ASICK]

Re: Opportunity

... If IFAs don't want funds to be wound up, or receivers appointed, I'm sure this is only to prolong the running of their gravy train. ...

Any commission which were coming from LM probably won't be coming from KM - that'd be a stock to the advisors. I guess they're looking around for their next gig.

Yep.. always the bottom line .. $$$$$$

As investors you should seek independent advice as to whether you'd invest with those who led you to LM's door in the first place - but don't get advice from those who are now clearly conflicted.

 

[scc]

The following is just my opinion, I'm not an investor in LM but am concerned by the possibility of people investing good money after bad. Although I do appreciate the alternative is most likely total loss.

Having worked in property development and seen feasibilties change over time, sometimes dramatically, any investors considering putting more money into Madison should consider, regardless of the price paid for the estate, the structure of the ownership, it appears any investment is still subject to all the risks associated with property development. Property development is a high risk activity, you need to be very confident in the skills of the development team involved. Even in good markets, which in my opinion, the Gold Coast is currently not, but seems to be improving, developers loose money.

 

[Boston2202]

I have been visiting this forum for some time now, to see what type of investors have been caught up with LM Investments.
Before I go any further, I will fully disclose that I am employed as a Portfolio Manager for a licensed Financial Firm based in Bangkok.......... and BEFORE angry LM investors get on the forum & tell me to 'go forth & multiply', I will also disclose that our firm is NOT a creditor of LM (we are not paid on a commission basis) and that our firm since I have been managing this department from 2009 have NOT recommended LM to investors. Also, the company I work for is legally registered in Thailand and I hold a valid Thai work permit.

The reason for me looking through this forum is that I have inherited clients from other IFA firms in Thailand that have unfortunately had substantial allocations of their portfolios to LM and I am trying to assist them with on-going information on the status of LM. As our firm had been quite (re: very) negative on LM over the past 4 years or so, our firm was not 'kept in the loop' with information. This is not to say that LM did not try very hard to induce me with very favorable business terms (i.e. commissions) to recommend their funds, especially the Managed Performance Fund, but after 3 years of me telling them they did not meet our 'approved fund' fund criteria, they sorted of gave up trying as hard.......but that also resulted in a lack of ongoing information.

I would like to respond to a few comments made by various people on this forum.

The first is addressed to the member that stated that LM was a substantial allocation of his pension portfolio, which I believe was invested through a Life Company Personal Portfolio Bond.

If the 'advice' to invest in LM was given by an IFA in Thailand, as has been said on this thread already, there is not much (if anything) that the Thai authorities can do about it, if you are not a Thai citizen. I am not sure how legal action initiated by an Australian legal firm against a Bangkok based IFA would be successful, as there are no formal regulations on 'Offshore' investment managers in Thailand.

However, as the members investment is through a pension, then there is the trustee of the pension that is involved. Now, how I understand it is that it is the trustees responsibility to ensure that the investment strategy of the pension is in accordance with the pension member's risk profile, investment objectives etc etc (i.e. basic financial planning) but more importantly, that the underlying investments of the portfolio have also been reviewed AND ACCEPTED by the trustees. The trustees have a duty of care to the member of the pension fund, so if for example 50% or more was allocated to LM, it could be argued that the Trustees of the pension have failed in their duty of care (i.e. insufficient diversification).

Now, this is where you may (emphasis on may...) have a legal case against the trustees, as in most cases these trustees are based in jurisdictions that DO have a financial regulator and Ombudsman. I would suggest that any effected LM investors that hold the investment through a pension structure, get the contact details of the Trustee of their pension plan and request what their 'duty of care' represents. Lodge an official complaint through the trustees complaints procedure and then take it to the regulatory body that governs that trustee, stating that while 'advice' was given to you by an IFA, it is still the trustees responsibility to ensure that the investments made are appropriate (irrespective of my opinion of LM, if an allocation is 30% or lower within a portfolio, it probably could be argued that allocation was justified.........not my opinion though).

Someone else wrote that their IFA came back & said that due diligence had been done on LM by the Life Companies that provide the Personal Portfolio Bonds and as such, was a reason why it was recommended.

Now, I am NOT going to defend the life companies (main ones here are Skandia, Friends Provident, Generali, Royal London 360) but that comment by the IFA is the biggest cop out........... The life companies do NOT choose / recommend the various investments, that is the role of the IFA. The life companies will look at certain investment funds to review whether they can be accepted on their platforms and I know that they have their own due diligence that they conduct. Obviously they do not want to approve that a Ponzi Scheme type fund can be held on their platforms, BUT if they happen to approve such a fund, they do NOT advise IFA's to put clients money into it.

Skandia, who I think are the largest did stop accepting LM on their platform a year or so ago, due to the way LM were paying IFA's commission (if anyone wants to know the levels of commission LM would pay, let me know as this was a major selling point LM would use to 'encourage' IFA's to use them....... I have the e-mails from them..!!).

Anyway, I know I may be seen as the enemy by many investors, but please understand before firing off any expletives at me, I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist.

 

[am262327]

I have been visiting this forum for some time now, to see what type of investors have been caught up with LM Investments ... please understand before firing off any expletives at me, I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist.

I don't have any expletives aimed at you, Boston, but can you help ME???

I have to take a break from this forum for a while.

 

[ASICK]

Farangs in Faradise

... If the 'advice' to invest in LM was given by an IFA in Thailand, as has been said on this thread already, there is not much (if anything) that the Thai authorities can do about it, if you are not a Thai citizen. I am not sure how legal action initiated by an Australian legal firm against a Bangkok based IFA would be successful, as there are no formal regulations on 'Offshore' investment managers in Thailand. ...

And with no formal regulations in Thai, why bother even walking thru the front door of a Thai-based financial advisor. I guess there'd be a BIG sign out front "Farang (guava/westerner (generally)), we take no responsibility for anything we hook you up with in Australia" - nah, just kidding - The sign would probably spruik "We give wonderfully reliable and responsible service - COME IN - sit down, massage?" (just kidding again -- it's Saturday, and for the first time in a while, it's not raining).

... Anyway, I know I may be seen as the enemy by many investors, but please understand before firing off any expletives at me, I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist.

What? With no disclaimer? ah! but then you probably wouldn't need a disclaimer when you're advising an Australian in Thailand, but how about an Australian in Australia, say in a public forum (you being in Thailand)? (just curious)