Investors' worst fear realised: Ross tells receiver cupboard is bare
(BusinessDesk) Wellington fund manager David Ross, whose businesses have been frozen after missing investor payments, has told receiver PwC not to expect to find any other assets after being released from hospital after three weeks of care under the Mental Health Act.
John Fisk and David Bridgman from accounting firm PwC, the court-appointed receiver and manager of the Ross Asset Management group of companies, met with Ross yesterday to confirm the financial position of the various entities under their management, according to a statement on their website.
"Based on this meeting, the receivers and managers do not expect to locate any further assets of significant value within the Ross Group (In Receivership)," PwC said. "The receivers and managers acknowledge this will be extremely disappointing news for investors."
Ross was released earlier this week after receiving compulsory treatment under the Mental Health Act, according to a statement released by legal firm Chapman Tripp.
PwC's Fisk and Bridgman said they will focus on collecting information from brokers and reporting to court on Monday as the next step of their management. They have already indicated they see liquidation of the Ross group companies as the appropriate step.
The Serious Fraud Office launched a formal investigation this week, having helped the Financial Markets Authority with its own inquiries since Oct. 25.
Ross, formerly a share broker, managed funds on behalf of 900 privately wealthy individuals, with management fees averaging $4.4 million a year paid in each of the last three years.
The PwC investigation found inadequate record-keeping and has been unable to source much of the documentary evidence for trading and investment holdings that it needs to complete a full picture of what looks to have the characteristics of a Ponzi-style scheme, where investors were paid out at least in part using other investors' funds.
It suspects many or most of the trading history disclosed to clients was "fictitious."
The Ross group's database purports to show investments worth $449.6 million, of which $152.4 million is said to be held in Australian investments, another $136.1 million in Canada, some $156.4 million in the US, $3.8 million in New Zealand, and $943,332 elsewhere. Of this, some $437.6 million was held by a Ross group subsidiary, Bevis Marks.
However, assets worth just $10.2 million, and $200,000 in cash deposits, had been identified in the receivers' initial searches, which they described as a matter of "considerable concern.'