Former Ross clients agree to return $6.8m, with more expected
Dozens of clients of Ross Asset Management have agreed to hand back millions of dollars they were able to withdraw before the massive ponzi scheme's collapse.
The latest report from liquidators' PWC into the former Wellington asset manager revealed 39 former clients have agreed to return money, totalling $6.8 million.
While hundreds of clients in the company lost millions of dollars in Ross Asset Management, a substantial number withdrew both their original investments and profits before its collapse in 2012.
Prior to the Financial Markets Authority raiding of Ross' office on The Terrace, clients believed the company was managing more than $400 million on their behalf.
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However the profits Ross was claiming were entirely fictitious, with customer withdrawals covered by investments from new clients. When the company collapsed only a few million dollars in investments were found.
Some of the former clients who were able to withdraw their investments face being pursued through the courts if they do not strike a deal to return at least some of the money.
Liquidator John Fisk of PWC began reaching agreements with investors at the end of 2015, but the rate of settlements has been steadily increasing.
"People are taking a view on what the outcome might be in litigation and then saying 'I'd rather deal with this now and get it out of the way rather than wait'," Fisk said.
PWC is awaiting the outcome of a test case against Wellington barrister Hamish McIntosh, who has been ordered by the Court of Appeal to return $454,000 in fictitious profits he withdrew from Ross.
McIntosh appealed to the Supreme Court, arguing he should be able to keep the money, while PWC cross-appealed, claiming that McIntosh should also have to return the original $500,000 investment. The Supreme Court is yet to make its ruling.
Another 93 former clients who have not reached settlements with PWC have signed standstill agreements, which effectively put legal action on hold until the outcome of the McIntosh case is released.
The agreements are required to prevent legal action against the clients reaching legal time limits. Fisk said if the Supreme Court decision is not released this year, PWC may need to enter standstill with another 61 former clients, which prevents further action.