Huljich fund gives clients exit offer

The directors of embattled Huljich Wealth Management have asked the Securities Commission to vet a letter they propose sending to the fund's investors, explaining why former chief executive Peter Huljich was forced to quit and offering them an exit route, without penalty, to other KiwiSaver funds.

Director and new CEO Don Brash said yesterday the commission had had a copy of the draft letter since February 26. While a sign-off is not required, Dr Brash said "under the circumstances" approval was being sought.

He suspected it would be a slow process, with a more complex final version than the one-page document he and fellow director, Auckland mayor John Banks, first envisaged.

The Securities Commission began investigating the fund after it was revealed last month that Mr Huljich failed to disclose to investors and the market that he had twice topped up Huljich Wealth Management with his own money to compensate for poorer than expected returns.

He was criticised by rival fund managers, especially Gareth Morgan and Carmel Fisher, who said that in a profession that relied on trust, skill and integrity in the management of other people's money, this type of conduct was beyond the pale.

Dr Brash said he and Banks were unaware of the top-ups until last month. "There is no doubt in my mind that [Peter Huljich] should have disclosed them."

There were two top-ups: one of $8500 in March 2008 – part of a $1.3 million injection Mr Huljich made from his personal funds into the firm's now-closed unit trusts in late 2007/early 2008 – and another of $141,000 in October 2008.

Mr Huljich stepped down as CEO last week after being told there were two options – either he resigned or Dr Brash and Mr Banks would have to quit. His father, multi-millionaire Chris Huljich, has replaced him on the board.

Huljich Wealth Management has 75,000 largely unsophisticated investors and $121m under management. Dr Brash said it was the largest Kiwisaver fund outside the six default providers and Westpac.

- © Fairfax NZ News