Investors in Ross Asset Management face a "gruesome legal fight" to recover their funds if investigations by regulators show David Ross was running a ponzi scheme, investor spokesman Bruce Tichbon says.
The receivers of the Ross group yesterday applied to the High Court to liquidate the companies and a hearing date has been set for December 17. Receivers have uncovered only about $11 million of the $449.6 million purported to be under management.
Mr Tichbon is among investors who put money into David Ross's funds on the recommendation of an adviser and the Financial Markets Authority wrote in a letter to him yesterday that it was "actively engaging with such advisers and will take appropriate action where, after investigation, any breaches are discovered".
"Some people have done very well out of David Ross," said Mr Tichbon, who has lost almost $1 million. "There will be a terrible legal battle between those who put more money in and those who took more money out. First it has to be determined whether or not David Ross was running a ponzi scheme."
Mr Tichbon represents more than 50% of the affected investors. In an effort to develop a strategy he has been in contact "with the people running the Madoff unwind" in the US.
He declined to give details until the plan is developed. Bernie Madoff was jailed after pleading guilty to running the biggest ponzi scheme in US history, involving billions of dollars.
In Mr Tichbon's case, David Ross was recommended by a friend's accountant, though others may have been steered toward the funds by another authorised financial adviser.
"This is how he seemed to operate," Mr Tichbon says. "Why have an expensive marketing campaign when word of mouth is bringing you clients anyway."
Receivers John Fisk and David Bridgman of PwC yesterday sought the liquidation of four Ross companies: Ross Asset management, Bevis Marks Corp, McIntosh Asset Management and Mercury Asset Management.
They also flagged the liquidation of four more companies – Dagger Nominees, Ross Investment Management, Ross Unit Trust Management and United Asset Management – by way of a special resolution of shareholders, acting through the receivers.
Messrs Fisk and Bridgman are seeking to be appointed liquidators.
Mr Tichbon says he has already written off his losses and any return "would be a bonus".
Mr Ross, formerly a sharebroker, 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 Serious Fraud Office and the FMA are investigating his companies.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- In his Editor’s Insight, Nevil Gibson says the Australian Budget is a curtain-raiser for an election
- Westpac's NZ CEO David McLean discusses the challenges his bank is facing amid rising costs and falling core earnings
- Is 2% the bottom for New Zealand's OCR? Join NBR's Jason Walls for Currency Talk
- Grant Thornton’s Pam Newlove on the sugar tax idea
- NBR’s Nevil Gibson discusses the 40th anniversary of Singapore Airlines in New Zealand