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FMA files suit against Prince and Partners as trustee of failed Viaduct Capital

The Financial Markets Authority has filed civil proceedings against Prince and Partners Trustee Co over its role as trustee of failed finance company Viaduct Capital, the first such case the FMA has taken against a trustee company.

Viaduct collapsed in 2009 owing 110 investors some $7.8 million.

The markets regulator alleges Prince breached its obligations to Viaduct investors and to the Treasury under the Retail Deposit Crown Guarantee. The claim alleges Viaduct's conduct "resulted in loss to individual investors and to the Treasury under the Crown Guarantee, to which Viaduct was a party."

"The FMA has serious concerns about the conduct of Prince as trustee in the case of Viaduct." it said in a statement.

"The FMA has determined that it is appropriate for the Court to consider the conduct in this case, and where appropriate to award compensation to investors who suffered loss as a result of Prince's failure to fulfil its obligations as Trustee."

"Trustees play a critical role in protecting the rights of investors and it is vital the public have confidence that a trustee's obligations will be discharged," said Belinda Moffat, the FMA's director of enforcement.

The law suit comes after the FMA filed charges in March against five directors of Viaduct Capital and of a related failed lender Mutual Finance, which had prior ranking over Viaduct's securities. Mutual failed two months after Viaduct.

(BusinessDesk)

Comments and questions
4

The first case the FMA has taken against a trustee company is astonishing considering their ineptitude during the 2000 to 2008 period.
Hanover, Stratetgic, Bridgecorp etc etc !!!!!!!!!!!!!

Prince and partners look like the tiny scapegoat to make the FMA feel good about themselves

Exactly right - where have they been for the last 10 years.
Prince & Partners are minnows compared to Perpetual and others.

Correct. Plus the manner in which the unwritten implied fiduciary duties that exist - where other people manage other people's money - are ignored by regulators in NZ is nothing less than criminal. From finance companies to trustees, to insurance companies, to super funds...the constant view in NZ is that the investor is the sucker low ranking unsecured creditor. While the only interests to protect are the shareholders.

The Doctor is right. They need to look at Perpetual for one. Trustee to most of the Finance Companies that went down. Completely inept. Them and The FMA