While BT faces the prospect of giving investors who have lost money in their funds their original capital back, plus 10% interest because of securities law breaches it works the other way too.In a letter to unitholders BT Financial Group chief executive David Clark says that if an investor withdrew their money and had earned more than 10% annually they “may be obliged to refund any money they earned above 10% to BT.”
It’s unknown if any investors fit into this category, but is quite possible as the breach period stretches back into the 1990s when markets were doing well.
BT says these issues, who pays what to whom, will be resolved by the High Court.
The whole issue comes about as BT, which is now a subsidiary of Westpac, may have failed to strictly comply with New Zealand securities regulations regarding the filing of documents for its Australian funds promoted in New Zealand.
Under the law any allotments made during the breach period are invalid and the penalty is that the investment is returned to investors with 10% interest.
BT says, in a letter to unitholders that it is “unlikely that any of its New Zealand clients’ investments were prejudiced as the non-compliance relates only to the timing of filing.”
It says the issue isn’t about “the content and accuracy of the prospectuses or investment statements.”
However, BT has filed papers in the High Court seeking validation of the affected securities under the Illegal Contracts Act.
It says the court has wide powers to validate securities and it argues; “BT therefore believes that it is in the best interests of investors, and in the public interest, for any void allotments to be validated by the court.”
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