Sonray collapse

[rtr]

When I opened the account with sonray they gave me the following info per email:

Quote: Shares are segregated and can be transferred out of custody any time you like. You will find that most shares in superfunds etc are held in custody these days. Shares are held with Citicorp Custodians and remain in the beneficial ownership of the client and are not part of either Sonray or Citigroup’s balance sheet. If that were to happen you could contact the custodian directly and transfer them elsewhere.


Hope this statement is still true...

 

[usom8]

Sonray Global Accounts – My Letter to the Administrators

Dear Sirs

I am writing in concern with my Sonray Global accounts: Uxxxxxx and Uxxxxxx.

Before I opened the accounts, Sonray made clear representations:
Funds of Sonray Global accounts are held by Interactive Brokers;
Funds of Sonray Global accounts belong to clients; and
Funds of Sonray Global accounts don’t belong to or as the property of Sonray or Sonray Capital Markets Client Segregated Funds Account.

You action of freeze my accounts caused damages to my trading activities, and the value of my accounts.

I hereby demand you to release my accounts and funds from the freeze immediately.

Please note that Sonray or its administrators do not have the authority to transfer my funds or make any traders for my accounts without my written consent.

Sincerely yours

 

[usom8]

Sonray Global Accounts

Sonray Global Accounts

The Sonray Global Accounts have been frozen by the administrators.

The funds of the accounts are held with Interactive Brokers. They are not the property of Sonray or Sonray Capital Markets Client Segregated Funds Account.

The action of the administrators is unreasonable.

I wish Sonray Global Account holders to participate in the discussion and have our voice heard by the administrators.

 

[usom8]

Re: Sonray Global Accounts

Sonray Global Accounts – My Letter to the Administrators

Dear Sirs

I am writing in concern with my Sonray Global accounts: Uxxxxxx and Uxxxxxx.

Before I opened the accounts, Sonray made clear representations:
Funds of Sonray Global accounts are held by Interactive Brokers;
Funds of Sonray Global accounts belong to clients; and
Funds of Sonray Global accounts don’t belong to or as the property of Sonray or Sonray Capital Markets Client Segregated Funds Account.

You action of freeze my accounts caused damages to my trading activities, and the value of my accounts.

I hereby demand you to release my accounts and funds from the freeze immediately.

Please note that Sonray or its administrators do not have the authority to transfer my funds or make any traders for my accounts without my written consent.

Sincerely yours

 

[usom8]

I have lodged an e-complaint with ASIC. Do your bit. Get our voice heard.

 

[usom8]

Sonray Global Accounts – Further Correspondence

Dear Sirs

Further to my previous email regarding my Sonray Global accounts: Uxxxxxx and Uxxxxxx, I remind you to immediately inform Interactive Brokers under the IB Advisor Client Agreement the concerns I raised that your action of freeze my accounts caused damages to my trading activities, and the value of my accounts, and that the freeze of my funds and accounts must be lifted immediately.

I reiterate my demand that you must release my accounts and funds from the freeze immediately.

Sincerely yours

 

[Bushman]

What a debacle. This is why you must read the PDS especially when using CFDs, derivatives etc. Will be on ASIC radar now given proliferation of both retail traders and trading companies.

http://www.theage.com.au/business/risky-rise-of-nonbroker-brokers-20100627-zbwb.html


'In many cases, these non-broker brokers have product disclosure statements showing that if the entity goes belly up, the investor becomes an unsecured creditor. This clause, buried on page 37 of a 41-page PDS, has shocked most Sonray clients, who believed their money was safe. Instead they have been told their funds are frozen and their accounts aren't in their own name but are co-mingled with other clients' money. The upshot is most clients are now unsecured creditors.'

 

[Ruby]

Following on from my previous posts in this thread.........

On the weekend I spoke to a friend who used to be a member of the Sharemarket College. They apparently have some sort of arrangement with Sonray, and pressure their clients strongly to use them as a broker. He became concerned when he realised he did not receive contract notes when he bought equities, or any documentation which stated that he was the legal owner of the shares; whereas in the past when he used Comsec he received contract notes.

He queried this with the Sharemarket College, which was initially not very forthcoming, and it was only because he persisted that they reluctantly sent him a document explaining the nature of the relationship with Sonray. See excerpt below:-

................... the purchased stock is registered in an omnibus account in the service provider’s name on behalf of Sonray. Contained within this omnibus account are many sub- accounts, each of which are assigned to a specific Sonray client. Sonray therefore effectively holds all stock and cash in a company omnibus account, which is then distributed to a specific designated client sub-account for the retail client.

Although at the level of an exchange, stock would be registered in the service provider’s name, comprehensive reconciliations are done intra-day to ensure that stock is allocated correctly amongst the sub-accounts to each individual client. For this reason, and because each client is responsible for the interest component, paid or received, in their account, by default whilst records show otherwise they are deemed and should be seen by accountants to be the underlying beneficial owner.

I think that means that although you may have bought shares, they are held in Sonray'sname and you are only "deemed" to own them. Please - anybody - correct me if I am wrong.

Needless to say my friend terminated his membership, moved his shares and is now breathing a long sigh of relief!

The Sharemarket College must now have a lot of very worried clients, all with their accounts frozen!!

I know buyers should always beware, but it seems to me to be deceptive conduct to lead people to believe the shares they bought are in their own name when in fact they are not.

 

[usom8]

Sonray Global Account

My further research find that Sonray Global accounts are hold under the Introducing Broker account of Interactive Brokers. It is under the protection of SEC and SIPC.

Interactive Brokers Consolidated Account Clearing Agreement: https://www.interactivebrokers.com/...iew?doc=showConsolidatedClearingAgreement.jsp

 

[usom8]

Sonray Global Account - my email to Interactive Brokers

I am writing in concern with my account Uxxxxxx.

The account is under your Introducing Broker Sonray Capital Markets, which went into voluntary administration last week.

The administrators find that there may be a significant deficiency in the segregated client accounts.

I telephoned your Sydney office earlier today and was told that I am not the customer of Interactive Brokers and my account is not protected by Interactive Brokers.

Interactive Brokers Consolidated Account Clearing Agreement states that:
“L. SIPC: It is hereby agreed between Introducing Broker and Interactive that, solely for purposes of the "financial responsibility rules" of the SEC and Securities Investor Protection Act, the participants in the Consolidated Accounts shall be deemed "customers" of Interactive and not the Introducing Broker.”

I request Interactive Brokers to exercise duty of care for my account to ensure that the account holder is the sole beneficiary of all funds, positions and other interests of the account, that no funds of the account should be unauthorized withdrawn or used, that no funds of the account will be used to pay for the creditors of Sonray, and that no funds of the account will be used to pay for the deficiency in the segregated client accounts of Sonray.

 

[artist55]

I am also an investor who had shares with Sonray. We had no idea that the shares were not in our name! We are devastated by this loss, and usom8, while I appreciate you writing to these organisations, what hope to we have? By the time they pay out other people's blunders, and then Ferrier Hodgson take out their enormous fees, we'll be last in line, and if we're lucky we might get a few cents in each dollar.

 

[Kowabunga]

So all we can do at this stage is wait?

 

[artist55]

If there was anything we could do to get our money back, I'd be doing it.

 

[Kowabunga]

Anyone seen this?

http://www.slatergordon.com.au/pages/class_actions_sonray_capital.aspx

 

[Bushman]

So all we can do at this stage is wait?

The administrator will be obliged to hold regular creditors meetings. They are usually the first point of contact.

 

[Carlo]

Sonray collapse and Tax

The reason I ask is that I never took anything out of my account. All dividends etc were always just re-invested, buying more and more stocks.

With Sonray dead - are all our sharemarket gains/losses/dividends now zero?
Will that the ATO accept this?

 

[Ruby]

I am also an investor who had shares with Sonray. We had no idea that the shares were not in our name! We are devastated by this loss, and usom8, while I appreciate you writing to these organisations, what hope to we have? By the time they pay out other people's blunders, and then Ferrier Hodgson take out their enormous fees, we'll be last in line, and if we're lucky we might get a few cents in each dollar.

The reason I ask is that I never took anything out of my account. All dividends etc were always just re-invested, buying more and more stocks.

With Sonray dead - are all our sharemarket gains/losses/dividends now zero?
Will that the ATO accept this?

I feel very sorry for everyone caught up in this mess. In your place I would feel I had been greatly deceived. If any of you were steered towards Sonray by financial advisers, I wonder if you would have any recourse against them (the fin. advisers)? They are supposed to have a duty of care to their clients, and would have been aware of the fact that clients' money was co-mingled and that shares were held in an omnibus account.

This website has links to a lot of the media reports in recent weeks and is updated regularly:- http://interceder.net/i/Sonray-Capital-Markets . I found it very informative.

 

[usom8]

The Committee of Creditors

A meeting of the Committee will be held next Tuesday. I as a member would like to hear from you so that I can speak on your behalf on the meeting.

Post here or email me: usom8@yahoo.com.au

PS: Wish rtr can give me more details regarding the email.

 

[Vincente]

Just who has given Ferrier Hodgson authority to seize private property? They are not a branch of the Australian government....did they have governmental authorization when they walked into the offices of Sonray on 22 June to freeze and seize everything they could lay their hands on, that in their biased opinion, was “suspect”, thus worthy of confiscation?

The only information/disclosure given to such authority was: “George Georges and John Lindholm were appointed” (by whom?) “pursuant to section 436A of the Corporations Act 2001“...again, appointed by whom and how much time prior to the 22 June announcement of said action were they and Sonray in discussions of such take over? This all didn’t just happen on 22 June, 2010 or in a day or even a week.

Section 436A of the Corporations Act 2001 states the “company” (in this case Sonray) “may appoint”....an administrator (in this case, Messrs Georges & Lindholm of FH)...evidently, this is the “voluntary” part of the action. No doubt, considerable conversation must have transpired between the two entities and Sonray selected, in their self-serving opinion, an entity best suited for their purpose....or most friendly to their strategy of escape from client fraud.

Disclosure demands full disclosure, not self-satisfying partial disclosure. When were FH first contacted over possible voluntary receiver status, who were they contacted by and what role did principals of Sonray play in preliminary steps/strategy to the 22 June seizure of client’s property.

A voluntary receivership means Sonray took all the time and steps in their (Sonray’s) best interest, before the fact, to squirrel away money for the fat cats and tidy up records to present the best image in the planned-for receivership. Media reports problems have existed going back to 2008.

Media manipulation reports the head of Sonray, Russell Johnson, had to surrender his passport. One can be sure that all the top players at Sonray, while minus their passports, will have taken steps before the entrance of the receiver, to secure their financial futures---knowingly at the expense of the clients they defrauded.

The documents sent all clients of Sonray by Ferrier Hodgson, dated 24 June, spell out mis-information, either intentionally or in error from information supplied by Sonray, but the documents are a total of ten pages, the last 5 pages of which, lay out the “renumeration” expected for Ferrier Hodgson calculated to be between $300,000-$400,000. It is fair to say, based on 50% of the documentation supplied, that Ferrier Hodgson has designed real benefit to be realized for themselves in this undertaking.

When a company gets in trouble, they do everything possible to clean up their method of operation knowing full well every little aspect will be examined. Voluntary receivership especially comes after thorough house cleaning, possible pre-discussion with the intended receiver....certainly it is not the same as if the receiver came in as a surprise and shut the operation down.

As shameful as this debacle is (and it is just the latest in a long string of such failures) one has to question the purpose/value of all the various “regulatory” agencies set up, supposedly, to protect against, indeed prevent, this type of fleecing of unwary citizens. We have the ASX, ASIC, FOS, SEGC, CHESS, NGF....just to mention a few. One would think with all this “regulation” & bureaucracy in place, some degree of ethical behaviour might be expected.

But no, in the case of Sonray, though holding a couple of Licences, they skillfully avoided those agencies that required them to be insured for collapse.

Why do the various agencies exist if the result is NO PROTECTION?

Why even bother issuing a licence in the first place?

Any entity that is allowed by law to hold in trust, in any form, money, property of others, must be required to also have full insurance to cover all forms of failure....period. You either have the insurance or you do not do business....no licence is granted, period.

Now if that was the case, rampant abuse such as Sonray would be brought to a minimum.

This seizure of property by FH was the culmination of actions, unknown to the victims of Sonray, that took place before the “voluntary” receivership maneuver and this smacks of collusion and complicity to put “the best spin” possible on the situation as the very nature of a voluntary action is that it is calculated.

A wall of silence has been erected around this sham that is going on....the ASIC and Ferrier Hodgson trying to “unravel” just how this happened. Mr. Georges, quoted in the media, is perplexed over ignorance of Sonray victims:

"However, Mr Georges said it was unclear how clients came to believe their accounts were kept separate, as the pooling arrangement was detailed in the terms and conditions of client agreements issued by Sonray." The Australian, 3 July, 2010

Ferrier Hodgson in their 2nd release of updated information states the problem at Sonray goes back to a rogue trader in 2008 who ran up a loss of some $6 million for Sonray. And Sonray, then allows the “rogue” to resign (he ends up working for another brokerage, even more bizzare, thank you regulators) and Sonray then starts dipping into client’s funds to cover the loss and it just gets worse and worse. Unbelievably, this "rogue trader" fiasco has been know to at least the ASIC for some time.

How in the world can Ferrier Hodgson be so naive as to believe that if Sonray would do such illegal activities as that and cover them up, they could then be expected to provide full disclosure of risk and co-mingling of clients funds thereafter?

Too many clients of Sonray have come forward to dispute they ever signed any kind of a disclosure that contained a glaring red flag warning of such risk.

It seems Ferrier Hodgson prefers to see/evaluate this fraud in the best possible light for the benefit of Sonray....remember, FH gets their $300-$400,000 right off the top, no matter what.

What we are left with is the “convenient” excuse that “investing is risky, one should do due diligence” and other such nonsense that means nothing when the playing field is tilted in favor of the criminal. In the end, the regulatory alphabets and Ferrier Hodgson fall back on: it is the victim’s fault....after all, it is so much easier to “earn” renumeration by laying blame elsewhere.

All these “exalted” agencies, regulators, and other such self-serving entities count on victim apathy. They tell you red is green, and expect you to accept it and go away, don’t bother them, they are too busy dealing with their renumeration. People have got to stand up and demand change, protection, compensation and answers, not empty platitudes.

I welcome response to my email address and hope we can form some kind of effort to stand up to this madness, otherwise the fat cats will walk with our money and we will be left with the Sonray carcass picked clean.

 

[Ruby]

Great post Vincente! I agree, there is far too little transparancy in the financial services industry, allowing this sort of blatant fraud to flourish.