Credit Sails probe awaits feedback from participants
The Commerce Commission has completed its investigation into the now virtually worthless Credit Sails notes sold to the public by Forsyth Barr in 2006.
BUSINESSDESK: The Commerce Commission has completed its investigation into the Credit Sails notes that were sold to the public by Forsyth Barr in 2006 and are now virtually worthless.
It began its investigation into the failure of the notes under the Fair Trading Act and has liaised with the Financial Markets Authority during its probe.
Forsyth Barr, one of New Zealand’s largest brokerages, was lead manager and underwriter of Credit Sails, an NZX-listed note offering 8.5% interest.
Some $91 million was raised from mum and dad investors and charities through sale of the notes, which were issued by Cayman Islands-registered Credit Sails and promoted by Credit Agricole SA subsidiary Calyon Hong Kong.
Funds raised were used to invest in Momentum Collateralised Debt Obligations, a security backed by a pool of various types of debt.
Some linked to Iceland’s failed finance sector, US investment bank Lehman’s Brothers and failed US directory publisher Idearc subsequently went into default.
“The commission’s investigation has advanced to the stage that it is now communicating is views to the parties who were involved with the investment offer,” it said today.
“The commission is awaiting their response, which is due early July.”
It described as inaccurate media reports that the commission was “poised to announce compensation payments to investors”.
The probe doesn’t have a limitation deadline because of an agreement reached between the regulator and the participants.
The commission said it is aware of a letter asking investors in the failed notes to help finance legal action to recover losses.
“The commission does not have a view on whether investors should subscribe to that joint effort, but does recommend that any investor contemplating joining in legal action should consult their own lawyer to ensure they have a full understanding of what is involved.”
The commission expects to give it next public update in July or August, it said.
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Credit Sails probe awaits feedback from participants
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