Lack of records foil receiver
Efforts to clarify the financial position of Ross Asset Management are being frustrated by a lack of records for its overseas investments.
The Wellington-based company was placed in receivership last week after a raid by the Financial Markets Authority on its offices on The Terrace on November 2. Its principal, David Ross, is in hospital and has been unable to instruct his lawyers.
Receiver John Fisk, of PricewaterhouseCoopers, wrote to the company's 900 clients with almost $440 million invested, explaining that the firm was "urgently" working with the FMA to try to establish the state of Ross' assets.
This was "not a straightforward process", Fisk explained, with obstacles especially to determining foreign holdings.
"We have been informed that much of the business activity relating to overseas investments was undertaken outside of the group's offices by Mr Ross and no records exist for these transactions at the group's offices."
The statement is now the subject of concern among both Ross' clients and the investment community.
Bruce Tichbon, who has formed a group to represent clients said the statement was "unhelpful" because it did not explain whether the lack of record keeping was unusual.
"This could be a very bad sign or it could be normal practice, but it scared people."
One senior investment source said it was not unusual for shares purchased through a broker to be held by that company in a nominee account, with little paper trail held by the client. However, the source said, if the holdings were owned on behalf of a client it would be unusual not to keep a record on hand.
"You'd have a record of the dealings with the overseas broker, at least, and [a record of] the holdings."
Fisk did not respond to requests for comment.
Last week it was revealed that Ross' 900 client accounts showed balances suggesting the clients held a combined $439m, although the FMA's lawyer, Hugh Rennie, QC, said there may be a difference between this and the actual assets held by the company.