Ross Asset investor group wants liquidation put out for tender

Monday 26th November 2012 2 Comments

A group of investors in the failed Ross Asset Management group has asked the High Court to be admitted as a party to proceedings and called for the liquidation of the companies to be put out to tender.

A tentative new date of Dec. 10 has been set for the Financial Markets Authority to update the High Court on the Ross Asset Management receivership, by which time receivers PwC is expected to have applied to liquidate the group.

At a brief hearing in the High Court at Wellington today counsel for receivers John Fisk and David Bridgman of PwC sought an order allowing them to sell property owned by the Ross Group to the extent necessary to pay their fees up until Nov. 12 of $153,683. There were insufficient liquid assets from the group's owner David Ross. Fisk told BusinessDesk said the application to put the group into liquidation would be made this week.

Also at the court today, Bruce Tichbon, who represents more than 50 percent of investors in Ross's group of investment companies, sought to be admitted to proceedings. Tichbon told BusinessDesk he was concerned his group wasn't being kept in the loop.

In Tichbon's memo to the court he also sought for any liquidation to be put out to tender with a clear brief on strategy and costs.

Members of his group had observed receiverships and liquidations "where professional fees have devoured all the money left over," he said. The tender for liquidation should clearly state "how investors' interests will be represented."

The receivers' memo said both receivers and counsel "are very conscious of costs given the overall circumstances" but the receiverships to date had been "challenging" due to David Ross's unavailability while in hospital after three weeks of compulsory treatment under the Mental Health Act and work was needed "to verify assets, recreate cash flows and consider legal options and avenues of recovery."

Wellington fund manager Ross, whose businesses were frozen after missing investor payments, told PwC on his release from hospital not to expect to find any assets other than the $10.2 million plus $200,000 in cash deposits initially identified by Fisk and Bridgman.

The Serious Fraud Office launched a formal investigation this week, having helped the Financial Markets Authority with its own inquiries since Oct. 25.

Ross, formerly a share broker, managed funds on behalf of 900 privately wealthy individuals, with management fees averaging $4.4 million a year paid in each of the last three years.

The PwC investigation found inadequate record-keeping and has been unable to source much of the documentary evidence for trading and investment holdings that it needs to complete a full picture of what looks to have the characteristics of a Ponzi-style scheme, where investors were paid out at least in part using other investors' funds.

It suspects many or most of the trading history disclosed to clients was "fictitious."

The Ross group's database purports to show investments worth $449.6 million, of which $152.4 million is said to be held in Australian investments, another $136.1 million in Canada, some $156.4 million in the US, $3.8 million in New Zealand, and $943,332 elsewhere. Of this, some $437.6 million was held by a Ross group subsidiary, Bevis Marks.

BusinessDesk.co.nz

Comments from our readers

On 27 November 2012 at 9:10 am Anonymous said:

With annual fees as reported,a home in Wellington, real estate in partnership with his brother in Queenstown, how is it that Ross has no money to pay the receivership costs.? Is selling the groups assets the easy path for PWC?

On 27 November 2012 at 9:53 am Peter said:

The fma should be investigating pwc not giving them lucrative contracts. The fma must be aware that since May of this year pwc have featured in two high court cases in NZ. And not in a good way. In the first and most serious case heard in Wellington and Auckland, Justice Fogarty found pwc partner Maurice Noone had altered a document. The document had been asked for by the Companies Office and the alteration and ensuing action or non action was directly attributable to hundreds of investors having their funds tied up for years. The second case out of the Christchurch high court just a couple of weeks ago and reported in the press found pwc partner Maurice Noone had failed in his duties in some way whilst acting as receiver for a company in that city. I am unsure of just how bad the breach was. Now here's the twist. A couple of days after that report,the press submitted a retraction and named the miscreant partner as John Fisk. If that is indeed the case what on earth are the fma thinking. It is an insult to the RAM investors. There must be someone better qualified and without the baggage of the pwc partners.