Ross Asset investors seek help on possible conflict of interest
A group of investors in Ross Asset Management is calling for the solicitor-general to determine whether the finance regulator has a conflict of interest in investigating the suspected Ponzi scheme.
Bruce Tichbon, spokesman for the Ross Asset Management Investors Group, said it appeared the Financial Markets Authority (FMA) had an incentive to suppress any evidence about the Ross collapse which may prove it may have acted without reasonable care.
Ross was placed into receivership at the start of November, with the first receivers' report finding that of the almost $450 million that clients believed was being held on their behalf, little over $10m had been identified. The FMA is investigating the company and its sole director David Ross, but has said that until investors began complaining that they were unable to get their money, it had not received any warnings about the company.
The Serious Fraud Office is also investigating Ross.
Mr Tichbon, who had invested close to $1 million in Ross Asset Management, wrote to the solicitor-general requesting it "urgently" provide an opinion on whether there was a conflict in the FMA's investigating the company.
He noted that the FMA had authorised David Ross as a financial adviser, a fact which was "instrumental in assuring many investors" that Ross was legitimate.
There have been reports that the Securities Commission, the FMA's predecessor, had raised concerns about Ross in 2009, but it appears no action was taken as a result.
Mr Tichbon said that the FMA may have breached its own establishment legislation, which states that it can be found liable in instances where it has acted in bad faith, or acted without reasonable care. Now that it was investigating Ross, and considering taking actions against those within the company, it may have a conflict of interest.
"This conflict arises at least in part because the FMA now has an incentive to suppress any evidence of liability on the part of the FMA/Securities Commission/government that may impact future liability of the parties," Mr Tichbon said in his email to the solicitor-general.
In an interview last week, FMA chief executive Sean Hughes flatly denied the organisation had acted without reasonable care.
Ross Asset Management is likely to be placed into liquidation today, with the investor group fronted by Ross resolving at a meeting last week not to oppose the process, and to support receivers PricewaterhouseCoopers (PWC) taking up the role.
Placing Ross into liquidation will give greater scope to investigating whether the company engaged in any transactions in the last two years which demonstrate a preference between investors. This could open the way for money to be clawed back from some investors.
The FMA could not be reached for comment last night.
- The Dominion Post
Is it worth it to fund a war museum in the capital for $18m?