The Securities Commission is investigating certain transactions made by KiwiSaver fund manager Huljich Wealth Management that may have been wrongly presented to investors.Huljich, whose directors include former National Party leader Don Brash and Auckland
The Securities Commission is investigating certain transactions made by KiwiSaver fund manager Huljich Wealth Management that may have been wrongly presented to investors.
Huljich, whose directors include former National Party leader Don Brash and Auckland mayor John Banks, today confirmed that it has withdrawn its current investment statement following concerns raised about the reporting of historical investment returns.
Huljich is currently amending its prospectus to clarify its published accounts for its three KiwiSaver Funds, which have more than $117 million invested on behalf of 70,000 members.
The Securities Commission opened an inquiry into Huljich after allegations surfaced that it artificially boosted its returns to attract more savers.
In a statement issued today managing director Peter Huljich said certain income in the six months to March 31, 2008 and the full year to March 31, 2009 was not “investment income” but funds contributed by him personally on two occasions.
He described the contributions as “compensation for the manager investing overweight or not diversified to the extent required.”
“The events arose in the early days of the funds, partly due to the small size of the funds at that time,” Mr Huljich said.
Payments made by Mr Huljich comprised of $8,573 in the six months to March 31, 2008 and $141,535 in the 12 months to March, 2009
The first “compensation payment” was to offset poor returns from KiwiSaver funds invested in Diligent Board Member Services’ initial public offer (IPO) in December 2007. Mr Huljich is a director and shareholder of Diligent.
The second payment was to offset losses occurred from portfolio adjustments in October 2008, when moving from defensive investments in cash.
“The amendments do not affect the previous reported actual returns for the three Funds,” Huljich said in its statement.
Nor would they change the reported high performance ranking of the KiwiSaver scheme in the year to March 2009, Huljich added.
The Huljich KiwiSaver funds have been ranked first for annual performance in 2008-2009 by Morningstar, FundSource and Aon.
But critics have said Huljich’s performance figures were also boosted by shares being sold by related parties into Huljich funds at well below fair value.
Mr Huljich said today that profits from shares sold to the KiwiSaver scheme by the manager at discounted prices would be disclosed in the amendments to the prospectus.
They related to sub-underwriting agreements of discounted rights issues including Nuplex Industries, AMP NZ Office Trust and Fisher & Paykel Appliances, he said.
“The KiwiSaver Funds benefited as a result by $130,659 since March 31, 2009. The Manager seeks opportunities of this kind for the benefit of members as it looks for opportunities for the KiwiSaver Scheme to give the best possible returns for members.”
The Securities Commission said it welcomed the moves by Huljich but is seeking further information on certain transactions made by the fund, and on the disclosure of income arising from these transactions.
“At this stage there is no indication that investors have lost any money as a result of these disclosure issues.
“The Commission is looking into whether certain income that was received by the fund was incorrectly reported as investment income in the presentation of historical investment returns for the fund.”
Until new offer documents are made available, applications for membership into Huljich funds are being held by the trustee, Trustees Executors Superannuation Limited, and will not be processed until the updated investment statement has been distributed to applicants.
The commission said it would make no further comment while its inquiries are continuing.
