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BFCSA: LMI Liqs and Trilogy conflict of interest over First Mortgage Income Fund failure.

Posted by on in Lawyer Lies
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LM liquidators get boot over conflict of interest
 
Monday, 12 August 2013 11:55am
 
 

FINANCIAL STANDARD

 

The Queensland Supreme Court has appointed a new receiver to oversee the winding up of LM Investment Management Limited's (LM) failed First Mortgage Income Fund (FMIF) after it found that its current liquidators had a conflict of interest.

The new receiver will be David Whyte of accounting firm BDO.

The previous LM-appointed liquidators, John Park and Ginette Muller of FTI Consulting, had previously resisted attempts by the Australian Securities and Investments Commission (ASIC) to remove them from responsibility for FMIF.

ASIC said it was concerned that Park and Muller were not putting the interests of unit holders of the FMIF before their own when they called a meeting of unit holders in April to change the responsible entity of the fund.

Queensland Supreme Court Justice Dalton agreed, saying: "The administrators of [LM] have, in my view, demonstrated a preparedness to act in a way inconsistent with those owing duties as responsible entity and trustee under the Corporations Act. My view is that they have preferred their own commercial interests to the interests of the fund.

"In a winding-up where conflicts may well arise, and may involve questions of some complexity, I feel no assurance that the current administration would act properly in the interests of members of the fund in identifying those issues or dealing with them. In my view, that makes it necessary that someone independent have charge of winding-up FMIF," he said.

The court also refused an application from Trilogy Funds Management Limited to oversee FMIF's winding up, on the grounds that the application was "incompetent" and that there was a potential conflict of interest.

ASIC will continue its inquiries into the collapsed Gold Coast-based fund manager LM Investment Management.

Ed: ASIC ought to have investigated this long before now....what a mess.

 

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  • doyla66
    doyla66 Saturday, 17 August 2013

    Yes Conflict of Interest is a problem. In our Supreme court appeal the sitting justice made comment that he had shares in Nab and did I have any issues with this.

  • doyla66
    doyla66 Sunday, 18 August 2013

    What? Nanna! That's an issue alright. Fancy his admitting it he had NAB shares.

    Conflict of interest between Trilogy and LM? Didn't Trilogy make an offer for LM at some stage? I read that somewhere.
    I've been reading about Trilogy from the other side: investors made poor by all the doings in Trilogy. People can't figure out why it's now worth so little compared to what it was. The investment is frozen. FOS can't help and apparently "ASIC are useless" for the investors. Efforts to find other investors and bring this situation to public attention (it has been going on for years) have resulted in threats against those behind it. Nasty business.
    A quick look on the internet revealed court cases - that would eat up some of the value. Then there would be ASIC and administrative fees - more money gone. Plus further 'expert' advice. Sounds like a forensic accountant would have a field day.
    Those caught in the Trilogy trap had better write to the Senate Committee about ASICs role in this. It sounds all too familiar ... and fishy ...

  • doyla66
    doyla66 Sunday, 18 August 2013

    "More fuel for the ASIC fire" -- article date June 8, 2013 Michael West Business columnist

    FTI Consulting's MD Mr Dopking formerly headed-up the insolvency division of ASIC 2008 to 2010., contacted ASIC seeking special treatment from its executives at the highest levels of the regulator.

    Read more: http://www.smh.com.au/business/more-fuel-for-the-asic-fire-20130607-2nvqv.html#ixzz2cI5jV69H

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