NZ's $366 mln investment fund insolvent -receiver
WELLINGTON Nov 15 (Reuters) - New Zealand receivers are struggling to recover investment funds of about NZ$450 million ($366 million) managed by troubled Ross Asset Management, PricewaterhouseCoopers (PwC) said on Thursday, warning that it appeared investors had been victims of a Ponzi scheme.
PwC receivers John Fisk and David Bridgman said in a report they had identified just NZ$10.2 million of the NZ$449.6 million the fund manager was believed to be controlling on behalf of 1,720 investors, after a week of searching.
"I can't say definitively at this stage, we've only been in there a little over a week, but it certainly has characteristics of a Ponzi scheme in that investors' money was coming into the account and those funds were being used to pay other investors," the New Zealand Herald newspaper quoted Fisk as saying.
Lawyers for Ross could not be reached immediately for comment.
The Financial Markets Authority began investigating Ross Asset Management last month following complaints from investors who had been unable to withdraw funds. PwC receivers were later appointed to the case.
"The Investment Fund managed by the Ross Group is insolvent, as it cannot repay the value of the portfolios reported to investors as they become due in the ordinary course of business," Fisk said in the report.
"We firmly believe a recovery strategy needs to be immediately addressed to maximise investor interests," he added, recommending that the Ross Group entities be placed in liquidation to recover investors' funds.
The receivers also said there was a significant gap in the identified market value of Ross investments as against the amounts reported in investors' portfolios.
"It is likely the historical returns advised to investors are exaggerated and may possibly be fictitious," they said.
During the recession and global financial crisis, as much as NZ$3 billion was lost in New Zealand's failed finance companies. ($1=NZ$1.23) (Reporting by Mantik Kusjanto; Editing by Clarence Fernandez)
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