Tower Trust Services has received news that $2.8 million in compensation money for 1500 of its investors caught up in a United Kingdom funds management scandal may be near.
Tower Trust Services has received news that $2.8 million in compensation money for 1500 of its investors caught up in a United Kingdom funds management scandal may be near.
The news comes just as Tower was about to go public on its frustrations over lack of progress on compensation payments with UK manager Morgan Grenfell and international accountancy firm Ernst and Young.
The matter dates back to last September when it was revealed there had been trading irregularities with the Morgan Grenfell European Growth Trust, which Tower's Spotlight Europe Fund invested directly into.
The UK-based Investment Management Regulatory Organisation (IMRO) froze the Morgan Grenfell fund in September after these irregularities came to light.
It was alleged former star fund manager Peter Young had breached British investment regulations regarding the holding levels of certain stocks.
Also, sophisticated cover-up mechanisms were used to disguise the holdings.
Following IMRO's action Morgan Grenfell's German parent company Deutsche Bank bailed out the manager by buying all the securities at their overvalued price.
Tower have been seeking compensation for its investors for nine months, but was making little progress on the matter.
Managing director Peter Fredricson said the company was to send a letter to investors on Monday expressing its frustration.
"We have found it difficult, if not impossible, to get definitive dates from Morgan Grenfell as to when these payments will be made to you," the letter said.
However, just days before the letter was posted Tower has received preliminary calculations suggesting $2.8 million in compensation and interest will be paid to New Zealand investors.
Mr Fredricson said Tower were checking these numbers to ensure they were correct before accepting the payment.
He said once the compensation matter had been resolved Tower would review its decision to use Morgan Grenfell as manager of its international investments.
"Rest assured that as soon as the compensation issue has been satisfactorily settled, we will look to review our relationship with Morgan Grenfell with the objective of providing investors in our international products with a level of service that they have come to expect and deserve," he said in the letter.
Tower Trust Services has received news that $2.8 million in compensation money for 1500 of its investors caught up in a United Kingdom funds management scandal may be near.