Ross Asset liquidation timeline getting closer

More meetings are planned today to work out a timeline to liquidate suspected ponzi scheme Ross Asset Management.

PwC receiver John Fisk has recommended the Wellington-based investment company be liquidated and says early indications suggest David Ross may have been running a ponzi scheme.

PwC has so far identified just $10.2 million of assets out of a purported $450 million.

There are more than 900 investors and 1720 individual accounts in RAM.

Mr Fisk says it is likely the historical returns advised to investors are exaggerated and may possibly be fictitious.

As a result, the actual cash loss which may eventually be suffered by the remaining investors will differ from the amounts showing as the “value” in individual investors’ portfolios.

Mr Fisk says today’s meeting between PwC and the Financial Markets’ Authority will be to run through the options for liquidation and to work out a timeline for the action.

He says an application will need to be made to the court to liquidate the company and he wants to see it done “sooner rather than later”.

Yesterday, the Serious Fraud Office said it would also be wading into the investigation.

bcunningham@nbr.co.nz

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24 Comments & Questions

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One can only hope that actual losses are spread fairly evenly across investors i.e. the majority of people withdrew as much (or nearly as much) as they invested.

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Maddoff might have been bigger in quantum, but I suspect this will be a bigger scheme proportionate to the NZ investment environment. What a disgrace, but on the positive side now investors will wake up to the risks associated with high returns, "Yeah Right...".

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I think that investors will need to check that there investment adviser does not directly invest client funds, but use uses professional investment managers that have custodial trustees for the clients' protection.

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Then one has to wonder, why use an adviser for asset/fund management at all? Just ask for and pay for advice, then DIY.

Re management; until the regulators start actively policing these guys, it seems they're more of a liability than they're worth.

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You mean like BridgeCorp or Capital & Merchant or SCF or.......

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Theres so many frauds in this life, and many of them present themselves in suits.

Isn't it time that Justice is done, instead of this home detention load of bollocks; as it clear punishment doesn't fit the crime.

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good advice anonymous.

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Where did all these people who are too dumb or lazy to look after their own investments get the money in the first place? Inherited it I suppose.

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no, not in my mothers case. she's worked incredibly long and hard for the money she had invested. after years of nursing my father through terminal illness and bringing my siblings and I up on her own in many respects. She returned back to work and worked long and hard to save up for a retirement and finally some rest and reward after being dealt an otherwise pretty unfair and unfortunate hand in life. she was invested with david ross through a reputable accountant. doing everything 'by the book' (or so she thought) as far as a risk mitigation goes. i'm devastated for her and those like her at a later stage in their lives who have had their hard won life savings stolen from them at the time they were finally nearly set to enjoy something from them

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Worked for it then invested it to make it grow. What a rubbish comment

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Superiority is a lovely trait.

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Charlie
It would certainly be a combination of both. Not that it is relevant!

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We'd all be better advised to study and understand any market we invest in as individuals - otherwise don't play.
You don't need to consult a commission hungry adviser - whose views have to be self serving by their very nature.
Be the custodian of your own shares/property portfolio. Cut-out the middlemen to increase your returns and lessen your risk.

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Paul Carrick - please take note of this excellent advice.

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For every Ponzi scheme there are thousands of other legitimate asset management companies. You only hear about the ones that turn out to be frauds. Some have great track records.

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When you say "Some have great track records" are you referring to the ones that turn out to be frauds, or the Ponzi Schemes?

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Well said. Sounds like there are a few "investment advisers" posting comments here in order defend their industry.

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A lot of brainless comments based on (another) one seemingly fraudulent adviser.
DIY investment is only as good as the person making the decisions and is analagous to doing your own heart surgery in order to cut costs and ensure there is no margin for (other peoples') error.
Except that it misses the point of using professional expertise where invariably it is warranted. It also fails to take into account fundamentals of investment strategy such as applying synergies or economies of scale, so that every man and their dog does not necessarily need to do due diligence on (say) Fonterra Units because they have someone competent who has done this on their (and many other peoples') behalf.
The "key" to using others is (and always has been) finding the right adviser and exposing them to a certain level of due diligence.
To be clear - I am not an Investment Adviser - but I do know of some who are both competent and honest !!

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As previously commented: by all means use a competent, honest adviser for advice, but why extend that to a custodial arrangement? Buying shares and moving money isn't rocket science (or heart surgery) these days.
And in terms of economies of scale; I doubt you'd spend more than your adviser would charge you in management fees.

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Will be interesting to see how this all plays out, if this is declared a Ponzi scheme and Fisk goes after the 'Net winners' as in the Madoff case it could see a lot of the fictitious profits repaid by investors into the pool to be divided up. Anyone that invested after the FMA approved Ross as an AFA should have the balance of their loss repaid by the FMA as they have clearly mislead investors.
The fact a fund manager is 2 years in arrears with the IRD and no red flags are raised, then approved as an AFA while in arrears is shocking. If the reason he was not audited is due Ross declaring himself an advisor not an investor is again a major issue for the FMA as they have failed to conduct the appropriate checks they should have. Watch this space FMA might find a fair amount of legal claims coming their way.

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Anyone got any ideas as to why the condition of David Ross is supressed? Surely the investors (myself included) should be made aware of this as he is not helping with the investigation and has not been charged?

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Good Questions! Considering the scale of this, the answers to these questions should be made public.
Could any of the investors money be sitting in off shore bank accounts in the Caymans?

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The ones that got out before Nov 1 might be best to park it there until the witch hunt is over!

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Don't forget fraudsters don't just exist in the investment world. What about dodgy lawyers, accountants and valuers who have misled trustworthy clients?

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