Wellington Capital PIF/Octaviar (MFS) PIF

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

The liquidator would not have any call on the assets of the fund.

But as OCVIM (an Octaviar entity) was the previous RE and the "sale" of the RE by OCV to WIM could be voided, the current RE should have to retire and a new RE installed by a vote of investors.

However,if the 'sale" to WIM was voided, JH may then try to argue that investors voted to accept WC as RE and that outcome should prevail. However, that vote was achieved on the basis of several key documented promises which have not been fulfilled - something ASIC may well be interested in as it sought to have the vote documentation clarified in the Supreme Court last year.

Essentially if the original "sale" was voided and JH contended that she had the investor vote, I am sure that an investor protest to ASIC could achieve intervention to have a new vote under the circumstances.

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

Essentially if the original "sale" was voided and JH contended that she had the investor vote, I am sure that an investor protest to ASIC could achieve intervention to have a new vote under the circumstances.

I'll butt out on this issue after this post.

All of the issues you raise would be remedied by a meeting, and as investors in the fund, you have the power (pursuant to the corporations act) to call a meeting.

Why try to seek ASIC's sympathy? You won't find sympathy there.

Why try to argue in the Supreme Court about she said this, did that? The outcome of a court case is unpredictable, even if you think you have a good case.

Why not just go ahead and have a meeting? -- Proposal 1 - amend the constitution to erase the $8m - and, Proposal 2 - to intall XYZ as manager.

I'd also like to add that it's worthwhile to vet the new manager and ensure that you will have confidence. I can only say from our experience in the FMF, that running from one manager into the 'arms' of another is not a smart move, unless (as we were), you are compelled to make the run.

But, I really do wish you well.

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

Marcom's observation regarding WC's apparent withdrawal of assistance in providing documents to push along our class action is a timely reminder of a very disappointing decision. Perhaps they are now co-operating, but if they aren't, the WC board must surely understand that by this disappointing backflip, they have put many PIF investors' minds into overdrive. We are now asking ourselves "for what reasons are we being let down so badly?"

Too many adverse results and broken promises are piling up to feel comfortable with the WC operation.

It's true that the OCV liquidation public hearings may provide some answers to our questions, but in the meantime we just watch our situation getting worse...

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

I just saw this article from the Business Spectator www.businessspectator.com.au/bs.nsf...ro-ASIC-pd20091022-X2QZZ?OpenDocument&src=kgb

What does this mean for our PIF class action against KPMG and others? A Federal Court has ruled that class actions must be registered as "Managed Investment Schemes" with a PDS etc. They must be kidding!


" THE KGB DOSSIER: THURSDAY, 22 OCTOBER 2009 by Alan Kohler

Registering investor rage

Is the Centro action filed by ASIC yesterday really a test case? Surely there isn’t a director in the land who does not think he or she is responsible for what’s in the accounts. All directors that I know certainly act as if they are.

If James Hardie directors were held responsible for a press release they didn’t see, then how much more accountable are all directors for the balance sheet, P&L and directors’ report that they spend a week poring over before actually signing?

The idea that directors can sign off the accounts and then go “Oh whoops, sorry” if there’s a big mistake in them is plainly absurd, and no director really thinks that. Mind you, they will wriggle out of it if at all possible, so the Centro case will be hard fought and controversial.

In my view the more important legal development on this subject this week was the ruling on Tuesday by the Federal Court that all shareholder class actions are managed investment schemes (MIS), and must be registered as such.

Having filed its long-awaited non-test case against the directors of Centro, ASIC should now quickly issue a blanket exemption for class actions against having to register as MISs.

On Tuesday the Federal Court, in a majority two to one judgment, ruled that all class actions were actually MISs and that the one against Multiplex – the subject of the case – was invalid because it hadn’t been registered with ASIC.

The case was on appeal by the defendant, Multiplex, after Mr Justice Finkelstein ruled against it. That means two Federal Court judges think class actions are MISs and two think they’re not; the majority ruling by the Full Court means, at this stage, that they are.

This is ridiculous, and can’t be allowed to stand. It would mean that only “sophisticated investors”, as defined by MIS regulations, would be able to bring class actions to recover their money because of the nuisance of registering an MIS, along with Product Disclosure Statement and the rest of it.

Unless ASIC exempts shareholder class actions then it will have to launch all proceedings against the directors.

There is already a class action against Centro directors over the same issue at the centre of ASIC’s claim – that directors mis-classified about $2.5 billion of debt as non-current in the 2007 accounts, when it was, in fact, current.

A cross-claim was filed by the company against its auditors, Pricewaterhouse Coopers, but so far no direct actions against the auditor. It’s expected they won’t be long arriving.

But perhaps the people most interested in the future of class action law are those running credit ratings agencies.

There is potentially a great dam of actions against ratings agencies that’s about to break, including in Australia. Moody’s, Standard & Poor’s and Fitch would like nothing better than for these to become managed investment schemes requiring a PDS and registration, although most of the claimants would probably by “sophisticated investors” (an ironic term, perhaps, in the case of those who bought CDOs).

Two claims against ratings agencies have been filed in the US over the ratings of structured investment vehicles like CDOs – one by Abu Dhabi Commercial Bank and another by California Public Employees Retirement System (CalPERS).

It is likely that if either of those lawsuits succeed then enough class actions will be filed against Moody’s, S&P and Fitch over their ratings of CDOs and other SIVs, to send them broke several times over.

It’s the last shoe of the global financial crisis to drop. "

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

just saw this article from the Business Spectator http://www.businessspectator.com.au/...cument&src=kgb

What does this mean for our PIF class action against KPMG and others? A Federal Court has ruled that class actions must be registered as "Managed Investment Schemes" with a PDS etc. They must be kidding!

Cookie1 my information is that IMF are covered but at this point are the only litigation funders in Australia that are. Seamisty

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

Thanks, Seamisty; I thought you might know where we stand. I'm pleased to learn that with IMF we're OK!

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

SHEDDING SOME LIGHT ON KPMG PRACTICES - it appears they have a character trait - thanks for the article "L"
Breaker

o Nick Mathiason
o The UK Observer, Sunday 25 October 2009
o Article history

To be fair, it was not an item to set the financial news pages alight. Few noticed when, two months ago, the all-powerful Securities and Exchange Commission on Wall Street forced General Electric, the world's biggest company, to restate two years' worth of accounts.

Accused by the SEC of four separate accounting violations, GE, while not admitting guilt, paid out $50m to settle the case last August. During the investigation, it appeared one of GE's "issues" was its apparent need to avoid a $200m hit to its profits caused by a hedging position that went wrong.

The SEC filing claimed that KPMG, GE's auditors, "rejected" accountancy measures to avoid the hit. But after several redrafts, KPMG approved the numbers and GE's hedges were reduced to manageable proportions. While GE endured the regulator's attention, KPMG is silent when asked why it has so far seemingly escaped scrutiny.

For KPMG, read the entire global auditing industry. As bankers take a kicking from an increasingly irate public, auditors have avoided the anger, even though they signed off trillion-dollar balance sheets, sanctioned increased dividends in bank shares that collapsed months later, blithely assumed markets would function seamlessly and established controversial rules that inflated bubbles and amplified losses.

It is why one fund manager dubbed the profession an army of Morlocks – the fictional troglodyte characters from HG Wells's Time Machine who spend their lives underground, away from the light.

The fact that auditors have not been brought to book for their role in the crisis is causing frustration and alarm to a growing number of politicians, regulators, fund managers and academics.

But the G20 and, in particular, the European Commission are beginning to ask questions about apparent conflicts of interest and the seeming cosy self-regulatory structures that govern what is a pivotal financial function: an investor's first line of defence in assessing the viability of the world's biggest and most important companies.

The commission is warning the bean counters' most powerful global organisation, the International Accounting Standards Board (IASB), that it has just one month to redraw key accountancy laws on how to value assets. Failure to do so in time will make it impossible for the world's biggest companies to state their 2009 accounts.

There is, says the commission, a risk of the London-based IASB, dominated by former KPMG and PricewaterhouseCoopers staff, being stripped of its power as a global rule-setter. In a number of European states, this would be seen as a victory over a disliked UK institution.

It comes as the Observer understands one European government has launched a scoping exercise to establish whether it is possible to sue the profession in one hit. Any such action, it is believed, would be on the basis that accountants took the lead in regulating themselves, setting international standards while also advising audit clients, and so are partly responsible for the financial mess.

While experts believe it will be at least another year before the trickle of legal actions launched so far becomes a flood, there have been developments. Last Tuesday, KPMG was named in a civil lawsuit for its role as auditor for Bernard Madoff, who perpetrated the world's biggest financial fraud. KPMG has issued no comment.

And all eyes are on the first case due to come before courts in America, where KPMG is being sued for $1bn (£690m) in damages by the trustee of a collapsed US sub-prime lender, New Century Financial. KPMG is accused of conducting "reckless and grossly negligent audits" that failed to show the lender's financial problems. The auditing firm has denied any wrongdoing.

It is hardly surprising that KPMG's name crops up so regularly. A trawl through the list of failed banks reveals the same audit names over and over again, because multinational auditing is the near-exclusive preserve of four firms - PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte & Touche.

The roll call of shamed institutions links PricewaterhouseCoopers to Northern Rock, Landsbanki, Carlyle Capital Corporation and Glitnir. Deloitte & Touche signed off Alliance & Leicester, RBS and Bear Stearns. KPMG did the numbers for HBOS, Kaupthing, and Bradford & Bingley, while Ernst & Young had the big one: Lehman Brothers.

"The cosy cabal which cocoons management and auditors has failed us," says Emile Woolf, an internationally respected forensic accountant who acts as a consultant for accountancy firm Kingston Smith. "Take HBOS: the 'independent' experts selected by the bank to review its risk manager's allegations concerning its insane business model just happened to be the bank's own auditors, who concluded, after vetting compliance (but not strategy), that there were no serious failings in corporate governance. Their fees... are reported to have exceeded £100m in the past eight years."

"Auditors have got away with murder," suggests one senior fund manager. "Why did they allow banks to pay out dividends that months later crashed?"

There is no one answer to that question. Some suggest the evolution of mark-to-market accounting – valuing assets in line with what the going rate is rather than what they originally cost or whatever is the lowest price – is central to auditors failing to look behind their assumptions.

Mark-to-market was born in 1993, according to the US's Brookings Institution thinktank. It was a reaction, it says, to the US savings and loan bank crisis, which was exacerbated by assets valued at what they originally cost rather than current value.

The subsequent remedy swung completely the other way at a time when the world was entering a 15-year growth cycle. The result, suggest some analysts, was that mark-to-market exaggerated the boom because it allowed banks and private equity to borrow on assets whose value was seen to be continually rising.

But others are less sure. The SEC last December pointed out that 31% of bank assets were reported using the fair value measure, rather than mark-to-market, as of first-quarter 2008. "Banks generally carried investment securities, trading assets, and derivatives at fair value."

For decades, auditors have enjoyed self-regulation. This has led to senior accountants, mainly from PricewaterhouseCoopers and KPMG, assuming rule-making status. Many argue that this apparent conflict of interest has led to auditors skilfully deflecting blame for failing to spot glaring black holes or fraud at a range of institutions from Enron to Madoff and the failed banks.

UK forensic accountant Richard Murphy says: "The fundamental question is how accountants got away with changing rules of accountancy, which state they don't have to assess the valuation of assets underlying the assets on a balance sheet. How did they get away with changing the audit rules?"

A source at the IASB, which is responsible for setting accountancy rules in virtually every country bar the US says: "There are lessons to be learned. There are enhancements we need to make. The question is about the root causes [of the financial crisis] and they are pretty clear. Bad lending decisions, poor risk management, rating agencies, lack of investor oversight. I would suggest auditing and accounting is low on the list."

"The profession has been fudging the independence issue for decades," says Woolf. "If that is not sorted soon, someone else will have to do the work – but properly."

In his book on the Equity Funding Corporation fraud – the Enron of the 1970s – Raymond Dirks wrote: "If routine auditing procedures cannot detect 64,000 phony insurance policies, $25m in counterfeit bonds and $100m in missing assets, what is the purpose of audits?" More than 30 years later, investors are asking themselves the same questions.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Interesting article Breaker. Another quote comes to mind which is appropiate in my opinion:::'No man is above the law and no man is below it: nor do we ask any man's permission when we ask him to obey it.'
Theodore Roosevelt

It is quite obvious there is a trend being exposed re just how much protection investors did not have in managed funds etc because what was offered and what we got was not only exploited and manipulated by directors and other staff, the compliance and safety nets that were 'window dressing' to lure investors was just that!!! These funds have not only been previously exploited, manipulated and robbed, the wrongdoings have been protected from being exposed from so called professional auditors!! This issue is not going to go away, in fact, I think very soon there will be investigations more complex than the fund structures themselves. Seamisty

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

This 08 Sydney Morning Herald article is a reminder of how we were to become Wellington PIF.

----------

Scott cements Octaviar coup with new chief and new deal
SCOTT ROCHFORT
May 9, 2008

THE management and boardroom coup at Octaviar by the Singapore-based businessman Chris Scott appeared all but complete yesterday, after the former Liberal Party leader Andrew Peacock quit his chairmanship at the stricken financial company formerly known as MFS.

Two months after the elusive businessman began his drive to install his own people on the Octaviar board, Mr Scott has wasted little time putting his stamp on the company - just five days after the resignation of the former chief executive Craig White.

In a market statement Octaviar announced the appointment of one of Mr Scott's close associates, Craig Chapman, as its new chief. It also outlined plans to sell its investment management arm to Wellington Capital, an investment firm closely linked to Mr Scott.

Octaviar announced it had entered into a "call option deed" granting Wellington Capital rights to buy the management rights over five unlisted Octaviar funds, including the $1 billion Premium Income Fund - where the deposits of its 11,000 unit holders remain frozen.

Octaviar's new "independent" chairman, Paul Manka, said: "The board has recognised it is not in the best interests of creditors, shareholders and other company stakeholders for Octaviar IM to remain a wholly owned subsidiary."

Mr Scott, who inherited a large shareholding in Octaviar through the sale of his listed leisure business S8 two years ago, did not return the Herald's calls.

Wellington Capital's managing director, Jenny Hutson, who joined the Octaviar board last week as part of Mr Scott's coup, said she expected the final purchase price - judging by the current performance of the business - to be "north of $20 million".

This is a far cry from the $1.33 billion that Octaviar's financial services business was worth when its rival, City Pacific, lobbed a merger proposal for it in January.

Ms Hutson said there was nothing untoward in the transaction, which will result in Wellington earning management fees from the funds.

Wellington made $9.2 million in fees and commissions last financial year. Ms Hutson said she would act in the best interests of unit holders in the funds, arguing that she would pursue a $50 million debt from Octaviar and the $67 million owed by MFS Living and Leisure to the Premium Income Fund.

"Our interests are quite different to the people in the Octaviar group," she said.

Ms Hutson noted that Mr Scott was no longer a director or shareholder of Wellington Capital.

-------

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Does the fact that this was all out in the public domain weaken PTQ's case against WC's acquisition of the PIF RE?

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

I've posted the first rough draft of a proposed 'investors' letter' on the 'Managed Fund Co-operation Group' thread for comment if anyone is interested.

It's also available here:-

http://www.moneymagik.com/investors_letter.php

Thanks.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Wellington Capital certainly is appropriately named. WellCap.com.au They've put a cap on the well from which we used to draw funds. They don't seem to have capped the seepage. Our funds are seeping away underground.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

For someone who took their NSX listing obligations seriously, thus preventing JH from adhering to her promise of 'openess and transparency' due to strict 'NSX guide lines', she sure is taking her time to inform investors she did not cooperate with Carney lawyers as promised re the Class Action and legal proceedings have NOT been DISCONTINUED and WIML is still a named respondant in said Class Action!! Nearly two momnths on from the last NSX PIN announcement and this incorrect information has still not been updated!!! Who is responsible for regulating information posted on the NSX????? How many PIF investors still have faith in JH because they think even though she FAILED to DELIVER on nearly all other promises she is compensating by letting them believe she is helping them by assisting our lawyers???? Seamisty

Sorry, can't help myself, another qoute from 'Teddy':::It is only through labor and painful effort, by grim energy and resolute courage, that we move on to better things.
Theodore Roosevelt

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

"Escapology is the practice of escaping from restraints or other traps. Escapologists (also called escape artists) escape from handcuffs, straitjackets, cages, coffins, steel boxes, barrels, bags, burning buildings, fish-tanks and other perils, often in combination."

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

According to the NSX, we have a trading halt. Perhaps we will get an update? Yes, see below.Seamisty
PREMIIIM INCOME FtlllD (NSXIN) - REQUEST FOR TRADING HALT
Wellington Capital Limited as responsible entity of the Premium Income Fund requests a trading halt on the
trading of units in Premium Income Fund. The reasons for the requested trading halt are to ensure that there
is an informed market in the trading of units in Premium Income Fund through the release of a fund update
announcement.
The Fund considers that the trading halt would last for 48 hours or until the making of an announcement by
the Fund, whichever occurs first.
V/ellington Capital Limited is not aware of any reason why the trading halt should not be granted.
Kind regards
Jenny Hutson
Director
Wellington Capital Limited
as responsible entity of the Premium Income Fund
ACN I 14 248 458 AFSL 291 652
Phone 1300 854 885
Fax 1300 854 893
Email
#1 8l 58
Level22 307 Queen Street Brisbane Qld 4000 GPO Box 694 Brisbane Qld 4001
T 1300

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

I see Wellington Capital http://www.wellcap.com.au/ has finally posted an update on its site :::'In September 2008 the Australian Securities and Investments Commission released ASIC Regulatory
Guide 46 – Unlisted Property Schemes – Improving Disclosure for Retail Investors.'

I am particularly interested in the fact that all loans related to other Wellcap projects are 'bank' orientated and do not exceed 7%!!!

More in line with what one would expect to pay when rates are at historic 49 year lows. I think PIF investors will be starting to ask more questions and expect to receive honest answers. Seamisty

 

[charles36]

Re: Octaviar MFS Premium Income Fund PIF

Seamisty, what you expect and what you will receive are two entirely foreign entities as you well know. I was reading my stars the other day and they indicated, "If you don't know what you are dealing with, how can you develop a credible plan for dealing with it? That's why people often prefer the devil they know to the one they don't. The trouble is, devils are devils. They like to lull folk into a false sense of security. They connive with our inner demons to produce misplaced confidence. As long as we reckon we know what we are up against, we won't notice them siirring up more trouble behind our backs." (Does this ring a bell with anyone)

On a serious note there are people behind the scenes actively working to find the right solution to our problems and I simply ask for people to exercise a little patience and caution. Our next step is forward up the ladder not two steps back everytime. Best of luck to all who read the forum and of course to those who contributre regularly.

 

[communique]

Re: Octaviar MFS Premium Income Fund PIF

At last!!!!

http://www.goldcoast.com.au/article/2009/10/31/153831_gold-coast-business.html

 

[wally3218]

Re: Octaviar MFS Premium Income Fund PIF

Our next step is forward up the ladder not two steps back everytime. Best of luck to all who read the forum and of course to those who contributre regularly.

Totally agree we can'nt go down any further were all ready on the bottom rung of the ladder. If we did go lower, bugger the ladder we will need spades to start digging a hole and I know who I would love to see put in it too.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Very interesting article Communique. I will post the full article. Seamisty

Source: Gold Coast Bulletin






MFS cops $147.5m claim from watchdog
Nick Nichols, business editor | October 31st, 2009

THE corporate watchdog has finally moved on failed financial services giant MFS, launching a $147.5 million action against former directors, including chief executive Michael King.

The claim, which makes sensational allegations of falsified documents, is dwarfed by the $2.3 billion owed to creditors, but it is the first tangible move by the Australian Securities and Investments Commission against the Gold Coast company since its implosion almost two years ago.

It also comes a week after ASIC launched action against directors of Centro Properties Group over alleged failings in the company's accounts.

ASIC yesterday filed the claim in the Supreme Court of Queensland to recover money from a number of former MFS directors, as well as a senior manager, after an 18-month investigation.

Along with Mr King, the action has named former directors Craig White, Guy Hutchings and David Anderson.

Mr Anderson, the former chief financial officer, is still with the company, now known as Octaviar, assisting liquidators.


ASIC's strongly documented claim focuses on the transfer of $147.5 million from the Premium Income Fund (PIF) to MFS in the months leading up to the $4 billion company's collapse.

The funds were allegedly used in part to repay a $103 million debt to financier Fortress Capital as MFS, at the time, is said to have had just $40 million in the bank.

ASIC alleges the payment, in November 2007, was authorised by Mr Anderson.

It further alleges Mr King, knowing MFS had insufficient funds to repay the loan, did nothing to prevent this money being drawn from the fund. ASIC lists a series of emails between various parties to support its claims.


It further alleges MFS created 'false financial documents' to 'disguise' the payment from PIF, which held about $800 million in investor funds, most of it the life savings of retirees.

One investor, who declined to be named, yesterday said this is the 'action investors have been waiting for' over 18 months.

The action also has been welcomed by Mr King who yesterday declared he would be 'absolutely' lodging a defence.

"It's really important that we finally get these matters out in the open," he said. "We're really looking forward to having this resolved in an open court."

Mr King told The Gold Coast Bulletin earlier this month that an open examination would uncover the 'true causes' of the MFS failure and the 'true people' behind that failure.

ASIC is seeking that all people named in the action be disqualified from managing a corporation.

MFS was founded by Mr King and Phil Adams, two lawyers who built a property and financial empire worth more than $4 billion at its peak in 2007. Mr Adams resigned as director in early 2007 and has been in Dubai since.