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Wellington Capital PIF/Octaviar (MFS) PIF

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Ex-MFS exec Adams files bankruptcy
FORMER high-flying Gold Coast executive Phil Adams has finally thrown in the towel and filed for bankruptcy with debts of about $120 million.

The decision is believed to have been accelerated by the MFS co-founder's recent return to Australia from Dubai, where he had been based for more than three years.

Mr Adams is now living in Sydney and it is unclear what his immediate plans are.

Full story:http://www.goldcoast.com.au/article/2010/11/02/267765_gold-coast-business.html
 
Looks like the ACCC, like ASIC, believes in the 'commercial morality' fairytale as well. Samuel tried sprinkling some fairy dust on Macquarie to get them to 'be reasonable'. And of course it didn't work. They really do seem to live in a bygone era.

There is an alternative ACCC and ASIC. Put your weight behind equity. If you don't wake up you might open your eyes one day to find that Australians are pushing for other alternatives, like Sharia law. A Muslim Arbitration Tribunal is already operating in the UK.

http://money.ninemsn.com.au/article.aspx?id=8116282
 

Here I go again - quoting myself.

I should have added after 'live in a bygone era': Or are in wilful denial about our legal system's more ruthless, dog-eat-dog, survival-of-the-fittest and more-fool-you base and origins.
 
We seem to be in the middle of a period when there’s little or no news about the PIF (not even the CA). Four Corners this week covered a communications scam which is worth viewing. As usual, the Gold Coast is mentioned. The program is available on the web via iview. Enter Four Corners into their search engine.

http://www.abc.net.au/tv/watchnow/
 

Maybe ASIC needs to set up a main office on the Gold Coast to better sprinkle its 'commercial morality' fairy dust where it's needed most. ASIC is absolutely clueless to Australia's true nature and through its AFSL Pushers funneled our funds straight to inevitable destruction. Just like all those feeder funds funneled victims to Madoff in the US. Unfortunately ASIC doesn't have the 'commercial morality', unlike some of the Madoff pushers, to now make up for their mistake and go into bat for us victims.

ASIC's concern for us is as fake as Swan's sympathy for victims of interest rate rises. Swan knows very well that rate rises are explicitly designed to cause financial pain. By making debt more painful. By taking money away from spenders and giving it to savers. What a fake, a fraud and a fabrication Swan's performance is. His true belief was revealed when he was sprung with the PIF question at the London School of Economics.
 
So here is an interesting scenario which presents itself after reading the following article::CBA unit to compensate clients for advice http://www.businessspectator.com.au...advice-pd20101103-AU4WS?OpenDocument&src=hp11



A Commonwealth Bank of Australia Ltd subsidiary will start a major client compensation program after an investigation found a former employee had provided inappropriate financial advice.

The Australian Securities and Investments Commission (ASIC) said that the Commonwealth Financial Planning Ltd (CFP) employee, who left the company in July 2009, had potentially breached parts of the Corporations Act.

"CFP is reviewing relevant client files to identify individuals who have been adversely affected," ASIC said in a statement. "In cases where inappropriate advice was given by the former CFP representative, CFP will calculate the investment positions those clients would have held had they received the appropriate advice and compensate accordingly.":::

I know that many individual PIF unitholders were offered advice from McLaughlins Financial Services employees passing themselves off as 'Senior Investment Advisers'.

So if these former MFS 'Senior Investment Advisers' do not have specific credentials/qualifications to back up their offered representation, does this mean that individual PIF investors who were influenced by so called MFS professionals offering inappropriate advice who lost money should not be offered some sort of compensation?

In hindsight I was offered advice from a MFS employee for approx 10 years ( who touted to be a MFS 'Senior Investment Adviser') who personally encouraged me to contribute a substantial investment in the PIF even after MFS/Octaviar appears to have been possibly operating as 'insolvent'.
Where do we stand legally if those responsible have not been held accountable by ASIC and have slipped under the radar of other regulatory bodies (er what regulatory bodies one could well ask?)
Food for thought re future legal actions.
Seamisty
 
Yes Seamisty. Sharing info so we can take legal action against financial advisors is something this forum still needs to do. Or the Action Group for that matter.

A while back I asked if anyone had taken legal action but got no response. If we get enough precedence going then it could make it a lot easier for us to get many quick settlements through. Is that a fair assumption? Hey, we might even get a bulk discount from a law firm.

I recall Slater & Gordon telling me they're not interested if recovering is likely less than about $200K.

First port of call for me would be the Dispute Resolution Service run by Financial Ombudsman Service http://fos.org.au/centric/home_page.jsp. FOS has Fact Sheets on Timbercorp and Great Southern. Why not us?

The Commonwealth government (and ASIC) stupidly didn't put a fiduciary duty in place. But there might be other bits of legislation we could base legal action on.

There's always Section 52 of the Trades Practices Act "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". But I'm not sure if this applies or how successful it would be.

PIF as an asset would be classed as mostly commercial property. While it may have been sold as fixed interest, the financial instruments that formed the assets were mortgages over commercial property. Correct?

According to my research recently, commercial property is classed as bordering on High Risk. See http://www.colonialfirststate.com.au/producteducation/managedfunds/assclassmf.aspx?menutabtype=pe

So. Was this asset class 'appropriate' or 'suitable'?

I couldn't find any useful info on the ASIC websites for identifying grounds for legal action against ASF licensees. Surprised?

But this page gave me some good pointers: http://www.aph.gov.au/senate/committee/corporations_ctte/fps/report/c02.htm

Particularly paragraphs 2.20 and 2.21 which point to S945A of the Corporations Act (and accompanying ASIC Regulatory Guide 175)

http://www.comlaw.gov.au/ComLaw/Leg...tattachments/B88495DFB6D26FD4CA257770001F817B
http://asic.gov.au/asic/pdflib.nsf/LookupByFileName/rg175.pdf/$file/rg175.pdf

S945A (1) (c) requires that "the advice is appropriate to the client, having regard to that consideration and investigation" and "Failure to comply with this subsection is an offence (see subsection 1311(1))."


That's as far as I've got for now.
 
http://www.townsendslaw.com.au/article.php?id=205

FOS BEATS RIPOLL IN RAISING THE STANDARD

"I love the FOS Determination 18959 also known as the Basis Capital Case. Determination 18959 came as somewhat of a shock to the industry in the way that it outlined a higher standard of care required of financial planners than many thought was the case. It did so six months before the Ripoll Inquiry purported to do so.
...

So why did it provoke claims that civilization as we know it was coming to an end as a result of the decision? When you think you’re doing a good job and someone points out that actually you are not, it can be a bit of a shock.
...
We cannot review here every finding of FOS's 49 page decision but we can summarise some of the more interesting.
· Advisers cannot abdicate their responsibility for assessing products to research houses or their licensees. The adviser must get a real personal understanding of the products they recommend.

· Advisers cannot comply with s.945A by simply outsourcing the risk profiling of their clients to a third party. The consideration of the risk profiler’s report is just one more piece of the investigation that the adviser needs to conduct if it is to ‘know the client’ to the necessary level.

· Advisers must exercise their own judgement in discerning good products from bad and cannot transfer that obligation to their licensee. In particular the fact that the product is on the licensee’s approved product list does not relieve the adviser from any responsibility to investigate the product thoroughly.

· Advisers should not state that they are “monitoring” investments unless they are in fact doing considerably more than conducting regular reviews. There is no point in an adviser saying that they have met the required standard of care by following industry practice of reviewing portfolios six monthly if they have promised the client something more – that they will ‘monitor’ the product.

· Advisers need to read third party reports carefully and be sure they understand them properly and implement them effectively. The Planner organised the wrong risk profile (namely of the individual rather than the client in their capacity as trustee of the SMSF), did not fully understand the report and applied and implemented an incorrect risk profile. He also did not understand the research and was not able to advise the client effectively as a result.

· Advisers must explain products to their clients clearly so that the client can provide informed consent. The adviser cannot rely on the fact that all the relevant information may be contained in the product’s PDS. It is well known that clients are not able to effectively read and understand a standard PDS and the adviser’s role is to assist the client in that task by understanding it themselves and fully explaining the issues to the client (including both the product’s risks and whether the product is therefore within the client’s risk profile). To the extent that the adviser fails to properly advise and explain they remain liable to the client."
 
Surge of postings from me today. More gold from Crikey: http://www.crikey.com.au/2010/11/04...dollars-mean-free-millions-dating-disneyland/
...
"The sad reality is that after six years, this novel exercise in self-regulation has failed. Since the code took effect neither ASIC nor the Financial Services Council (formerly known as the Investment and Financial Services Association) have been monitoring the quality of disclosures made by wealth management conglomerates such as BT and Colonial.
But in only a few days of cross-checking these suspect registers, Eureka Report has found a slew of inconsistencies in reporting, several of which appear to constitute clear breaches of the code.
The code is a joke. But not a very funny one.
The FSC admits it is not actively scrutinising the registers and ASIC has washed its hands of responsibility."

Then there's this article:
http://www.crikey.com.au/2010/11/04/sorry-but-there-are-bigger-issues-than-residential-mortgages/
"For all the tabloid fury, talkback anger and political vitriol directed at the banks ... there are systemic issues that are at risk of being overlooked in the emphasis on home mortgage rates and infuriating bank fees. One of them is that the collapse of non-bank competition has allowed the banking cartel — strengthened by being allowed to gobble up Bankwest and St George — to focus more on lower-risk residential mortgage lending, choking off higher-risk business lending. Small business and the construction industry — which saw some truly scary building approval figures yesterday - continue to pay the price for this. And the cartel knows perfectly well that it will attract far less outrage by punishing business borrowers with higher rates than households that actually vote."


I.e. Less competition for PIF on our part finished projects. So WC ... what's going on?
 
Thanks simgrund and duped, unfortunately comments such as from 'ASIC said' do not inspire me with confidence ;;: ''CFP has agreed to identify those affected and assess liability and appropriate compensation. To ensure that the client compensation program is fair, an independent expert will review the implementation of the program and compensation offers.

''ASIC will also meet with CFP representatives each month to monitor the progress and outcomes of the program.''

Its investigation into the former CFP representative is continuing.'::

I actually question on a daily basis the usefullness of ASIC at all? In fact apart from ASIC 'continuing to investigate' year after year with seemingly no positive results WTF do these people do to warrant $582 million in fees and charges of taxpayer dollars in the past 12 months? Especially since I was told for approx 12 months in no uncertain terms after Octaviar collapsed that ASIC were not interested, not accountable, not responsible and until HELLO!!! the evidence could no longer be avoided, and it was finally acknowleged there was an undeniable problem and the original bleaters actually had evidence and were not going to go away! So not much has changed, we still get fobbed off and I guess ASIC is still monitoring the situation and sitting on the sidelines waiting for others to do the dirty work which ASIC may or may not act upon. Cynical, you bet I am and with good reason.

Seamisty
 
From todays SMH Business Day: http://www.smh.com.au/business/oh-what-a-lovely-wal-says-leighton-20101104-17ftm.html

BALMAIN BOYS

The managers of the former City Pacific-run First Mortgage Fund, Balmain Trilogy, have released accounts that will be sure to irritate some of the 10,000 unit-holders with deposits still frozen in the fund.

Aside from a $43.8 million full-year loss (largely due to asset write-downs), the accounts show the new managers were paid $7.7 million in management fees and had $727,889 in expenses reimbursed during the 12 months. Still, this is well down on the $30 million in base management fees the Phil Sullivan-founded City Pacific used to suck out of the fund.
 
Afternoon all,
I read about this Refco case in todays AFR and found some links about it.

As you all know I have no legal expertise but do follow your plight...

This particular case is totally unrelated and probably has no comparisons but the recent decisions handed down in America ...surprised me and I thought that you might be interested in them too.
It appears to be more about a corporate shells ability to sue their outside advisors and other rulings re securities fraud.

http://dealbook.blogs.nytimes.com/2010/10/27/the-hurdles-to-suing-outside-advisers-for-fraud/

http://www.complianceweek.com/article/6227/court-ruling-exempts-third-party-fraud-liability

NB..These are not Australian cases ..
 
An article of interest from NZ; I don't think there's anything new but it documents what happened and some lessons:

The Fall of MFS
November 4, 2010 by admin
Filed under Hot News

"Amongst the numerous investment funds and financial institutions falling victim to the global credit crunch, one that surely need not and should not have succumbed was New Zealand-based MFS Pacific Finance Limited.

Starting life in New Zealand in 1999 as a subsidiary of ASX-listed MFS Limited (now known as Octaviar Limited), an early venture saw the Company take over the name and management of several underperforming Waltus property funds, ..."

"Lessons

Unfortunately MFS Pacific Finance is beyond rescue as an operating unit in its original form and its passing is a genuine loss to the New Zealand finance company sector. In addition to offering investors currency diversification, MFS Pacific carried the potential to set a new benchmark of financial support for finance company borrowings through the “Put Option”. To date no other parent/subsidiary relationship of companies listed on the New Zealand Debentures Exchange has instigated a similar enforceable guarantee. Perhaps the new “Global Credit Crunch” reality will empower investors to demand just that.

In addition, as more intricate trading mechanisms such as margin trading, stock borrowing and short selling evolve, it becomes clear that disclosure of such potentially dangerous practices must become a mandatory requirement imposed by stock exchanges or legislation if markets are to be open and informed. Private investors have quite enough risks to contend with, without the secret avarice of their own company’s directors and executives exposing them to even more.

But while the mandatory objective may prove an optimistic goal in the short term, ordinary shareholders and fixed interest investors alike can take their own action immediately, wasting no time in sending the “totally unacceptable” message loud and clear to directors and executives where margin trading is concerned." (emphasis added)

Full article: http://www.tennisguide.org/the-fall-of-mfs.html
 
Cookie,
Margin loans certainly muddied the waters..of many Australian cos. at the time and its crazy that the numbers of Directors margined shares are not made public however share sales are....and I dont think we are even clear on who held ownership when shares were margined...ie voting rights over so many shares on the register?

Sorry about the second link I posted at 2.42pm...looks like its not coming up ..so I found a case decision 21 oct 2010 ...it isnt that negative about half way down the page..

http://www.courts.state.ny.us/reporter/3dseries/2010/2010_07415.htm

even the different states in America appear to differ on this...I think?but I found it of interest anyway.
 
From todays SMH Private Sydney Andrew Hornery
November 6, 2010

http://www.smh.com.au/lifestyle/people/hellbent-on-making-a-marquee-mark-20101106-17hr1.html

COLT NO MORE

He may be a little greyer, but the Colt from Kooyong, the former Liberal Party leader Andrew Peacock, has finally bolted.

In Melbourne this week for the Spring Racing Carnival and to visit his daughter Ann, Peacock told PS his wife, Penne, the former United States ambassador to Mauritius, had been busy packing up 220 boxes in preparation for vacating their Double Bay home, which they sold in July for more than $4.5million.

‘‘We spend most of our time now in the US and it made sense to base ourselves there permanently,’’ Peacock explained, adding that his wife’s Texas homeland had become his new base.
A keen racehorse owner and former paramour of the Hollywood icon and much-lived actor Shirley MacLaine, Peacock said he always enjoyed attending the big race meetings in Australia, but he was not as prominent in his support of the sport in the US.

‘‘They look at it differently over there. It doesn’t have the same prestige as it does in Australia and perhaps some of the people who are involved in the sport in the US are probably a little more ... well, colourful,’’ he explained.

‘‘Horse racing is not something I tell a lot of my associates about in the US,’’ he said, with a wry smile"...

Talk about the colt bolting before the liquidator moves in!

From Bentleys web site section on key achievements:

"Commenced detailed investigations surrounding the demise of the group, the group’s solvency, and its operations in Cayman Islands, Dubai, and the US;
 

I think Mr Peacock would fit in just fine with the, “ colorful” racing clique in the US . After all, as the CEO of a Company that has stolen 200 million from what amounts to a Pension fund ,his credential would be impeccable.

I wonder if he mentions that little affair to his American pals.

It is an absolute disgrace that he has been allowed to disown his involvement and role in MFS .

Many investors bought shares or decided to invest in the PIF bases purely on his reputation
 
I bet thats one happy old nag who can't believe the gate was left open. Even knackers yards have standards to maintain!!

On another note, I was thinking whatever happened to the proceeds from PIF's Mackay’s Latitude development? That property owed us approx $10mill and was due to be settled in early 2010.

Port Maquarie Icon apartments owed us approx $23mill and have been steadily selling for most of this year, where are the proceeds from that?

Wellington Capital took possesion of another PIF asset, the Forest Resort Hotel at Creswick on April 1st 2009. This property was a profitable going concern at that time generating good income, what has happened to that income stream?

Anyone holding other investments with WC, ie Rimcorp Property Limited?
The Rimcorp property portfolio consists of four industrial property trusts comprising seven properties
located in:
Queensland – Banyo, Eagle Farm and Salisbury;
Victoria – Derrimut and Thomastown
South Australia – Golden Grove

I notice Wellington Capital has not updated its website with the appropiate 2010 RG46 Disclosures for these properties. I am curious to see how these performed this year. Efficient (not) as ever! Wellington Capital Botoxique Investment Bank does not appear to be a very viable, professional operation!!

Seamisty
 
An old French proverb says, "The tulip is, among flowers, what the peacock is among birds. A tulip lacks scent, a peacock has an unpleasant voice. The one takes pride in its garb, the other in its tail."
 
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