NBR print edition 5/4/13 – FMA declines NBR access to information

This is disturbing, that the Financial Markets Authority (FMA) will not release the second referee’s details.


NBR Print edition 5/4/13 – FMA declines NBR access to information – Duncan Bridgeman

The Financial Markets Authority is refusing to disclose the identity of a second referee supporting David Ross’ application to become an authorised financial advisor.

To get their ticket, and AFA is required to pass a “good character” assessment with support from two testimonials, including one from a recognised industry or professional organisation.

Mr Ross became an AFA on July 12, 2011 after the FMA authorised him to provide “financial advice and discretionary investment management services” under section 55 of the Financial Advisors Act 2008

Following NBR enquiries, FMA confirmed in December that the Institute of Finance Professionals (INFINZ) provided one testimonial.

However, the regulator will not release details sought by NBR under the Official Information Act of a second  testimony provided by a client, saying the identification is subject to the Privacy Act.

NBR sought the identity on public interest grounds including the public having a right to know the calibre of referees backing this country’s AFA’s, especially given  the collapse of Ross Asset Management.

Article continues in print edition

Bloomberg – Madoff investors can’t sue SEC

There have been constant calls from RAM investors to sue the FMA in NZ for failing to follow up on multiple warnings over the years that RAM was fraudulent. Our advice has been its hard to sue the NZ government and RAMIG’s efforts for now would be better used elsewhere.

The following press from the Madoff case in USA shows the same problem there, the federal Appeals Court refuses to support a suit against the Securities Exchange Commission (or SEC, the equivalent of the FMA and its predecessor the Securities Commission in NZ). This is despite the SEC being given multiple warnings on Madoff, and doing multiple investigations of Madoff and failing to find anything wrong.

In NZ the FMA and the Securities Commission, as far as we know, did not even investigate Ross Asset Management, despite multiple warnings.

However, other aspects of the US law are still of interest to RAM investors. The US courts vigorously pursue claw back in Ponzi cases, and in this regard they set a common law standard for the NZ courts to specifically accept or reject.



Read full article

Text here abridged.

Bernard Madoff’s investors can’t sue the U.S. Securities and Exchange Commission for failing to uncover his massive Ponzi scheme, a federal appeals court ruled.

The regulator’s “regrettable inaction” is shielded by law, the New York-based appeals panel said today, upholding a lower-court decision to dismiss suits in which investors accused the SEC of negligence.

“Despite our sympathy for plaintiffs’ predicament (and our antipathy for the SEC’s conduct), Congress’s intent to shield regulatory agencies€™ discretionary use of specific investigative powers€ defeats the investors€™ claims, the court said.

The SEC’€™s inspector general found in a 2009 report that the agency had failed to make a €œthorough and competent€ investigation of Madoffs firm, Bernard L. Madoff Investment Securities Inc., despite having received detailed complaints.

NBR – Rising Cost of Ross Asset Collapse 14/3/13

Rising Cost of Ross Asset Collapse

Blair Cunningham – National Business Review – Thursday 14 March 2013


The collapse of Wellington-based Ross Asset Management has so far cost investors $112,000 in legal fees, with a further $204,000 in liquidators’ fees yet to be charged.

Liquidators of Ross Asset Management and its associated entities have found $11 million in assets of the $450 million which around 900 investors thought was being managed on their behalf.

PwC liquidator John Fisk says since the company and associated entities went into receivership in November a further $86,000 has been paid in administration costs and expenses.

“This is primarily the costs associated with maintaining the Ross Group Companies’ offices on The Terrace and the employment of former staff to assist in investigations.

“Staff resigned from RAM when it went into receivership but PwC has since rehired at least two employees to help with investigations.

“The liquidators intend to vacate the offices shortly, which should reduce on-going overhead costs.”

The RAM liquidation committee, chaired by former commercial lawyer Jiohn Strahl, held its first meeting late last month – the details of which have now been released.

Tax returns

Mr Fisk has agreed to write to the IRD requesting an extension of time for all investors to amend their tax returns for the period ending March 31, 2008, the earliest period to which it would be possible to obtain a reassessment.

He has also told investors to consider what impact the receivership and liquidation of the group companies may have on their income tax return for the period ended March 31, 2012, if it has not already been filed.

Mr Fisk says PwC has yet to charge its $204,000 remuneration bill or pay $22,511 of disbursements.

Moves will also be made soon to recover debts from David Ross.

“According to the most recent set of financial statements, David and Jillian Ross are jointly indebted to Ross Asset Management in the sum of $3,491,579. Recovery action against Mr and Mrs Ross is expected shortly in relation to the repayment of this amount.”

He says the liquidation committee has encouraged PwC to act quickly to recover the debt, although he is uncertain about just how much money will be repaid.

Mr Fisk has previously indicated the sale of assets may not be out of the question to recover the debt.

RAM’s bank accounts in the 12 months leading to receivership show $17.5 million of investment sales, against $29.48 million of investor payments.


Dominion Post – Ross fraud may hit IRD via tax refunds

Jason Krupp   07/03/2013

The Internal Revenue Department may add its name to the list of parties affected by Ross Asset Management fraud.

In a report on the first meeting between PricewaterhouseCoopers and an advisory committee of investors, liquidator John Fisk said he had begun talks with the IRD over refunding tax payments made on fictitious Ross earnings.

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NBR 20 Dec 2012 – FMA conflict of interest allegations misconceived and flawed

This appeared in the NBR in response to a complaint by the RAM investors group to the Solicitor General

FMA conflict of interest allegations misconceived and flawed

Article by Blair Cunningham  http://www.nbr.co.nz/subscribe?return=134177

The Financial Markets Authority (FMA) says it has fulfilled its statutory obligations amidst a conflict of interest complaint.

Ross Asset Management investors’ group has complained to the solicitor-general’s office of a perceived conflict of interest.

“FMA is not simply an investigatory and enforcement agency, but also has a statutory mandate to authorise and license market participants. It is inevitable the FMA will at times investigate and bring proceedings against entities it has previously licensed,” spokesman Tony Reid told NBR ONLINE in a written statement.

Investors’ group spokesman Bruce Tichbon says he got a “strong sentiment” from members of the group he should seek clarification of whether or not the FMA has a conflict of interest concerning RAM and related investigations.

He cited four major concerns:

• David Ross was licensed by the FMA as an Authorised Financial Adviser and David Ross had issued a disclosure statement to clients in mid-2011 stating this. The action of the FMA and this disclosure was instrumental in assuring many investors RAM was legitimate and had a more reasonable risk profile.The FMA was charged with doing due diligence on Authorised

• Financial Adviser’s, but had not investigated RAM.
• The government had passed major pieces of financial legislations since the finance company crashes of about 2008, including the Financial Advisers Act 2008 and the Financial Markets Act 2011. These actions created the impression of reasonable regulatory supervision and oversight of the financial markets, but this was not in fact the case, as evidenced by the collapse of RAM.
• The Securities Commission (the precursor to the FMA) was warned there was cause for concern about RAM three years ago in 2009, yet no action was taken.

Mr Tichbon has been referred to the Ministry of Business, Innovation and Employment and is currently considering his next steps.

“The FMA may now have a conflict of interest, in that it has failed to act on previous warnings but is now engaged in the investigation, receivership, liquidation of RAM and potential action against Authorised Financial Advisers who were involved,” Mr Tichbon says.

But Mr Reid says the FMA has applied the law “consistent with our mandate and discretion.”

Blair Cunningham – Wellington reporter