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Regulator aims for 95% repayment for investors in frozen ANZ/ING funds

The Commerce Commission is aiming for investors in the frozen ING funds to get 95% of their principal back after it settling with the fund manager and ANZ New Zealand last month.

Wednesday, July 21st 2010, 11:05AM 2 Comments

by Paul McBeth

 

The regulator directed the $45 million settlement to go to about 80% of the 15,000 investors to help top up repayments to 95 cents in the dollar. The other 20% who don't get a payment have already, or are likely to, have received more than 95% of their principal already.  

"The payment approach fulfils the commission's stated intention to return as much of investor's initial capital as possible, in the most equitable way," enforcement bran manager Graham Gill said in a statement.

"With 15,000 individual investors it has been necessary for the commission to make certain assumptions, rather than exactly calculating each investor's position."

The commission decided against pursuing court action against the fund manager and the bank over the promotion of the diversified yield and regular income funds, saying the punitive fine wouldn't have been worth the extra cost and uncertainty in achieving a successful prosecution.

The settlement was on top of more than $500 million already paid to investors through ING's offer last year and individual agreements through the Banking Ombudsman.

The regulator said it considered paying a blanket 7 cents to all investors, but decided against it as some investors would have only received 70% to 80% of their capital bank.

Payments are expected to be made by mid- to late-November.

The regulator assumed all investors accepted ING's offer of 60 cents in the dollar for investments in the diversified yield fund, and 62 cents in the case of the regular income fund, so the 1.5% of investors who chose not to waive their right to pursue legal action will likely fall short of the 95% target.

"If you did not accept the ING Offer and now wish to sell your units, you may wish to contact the ING to discuss whether a sale of your units can be arranged," the regulator said in a Q&A section on its website.

ANZ and ING accepted no liability in the settlement, though the bank accepted some of its advice from its advisers might not have been up to standard.

Paul is a staff writer for Good Returns based in Wellington.

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Comments from our readers

On 21 July 2010 at 5:51 pm Adam Smith said:
Is a bit of lily-gilding going on here?

A de minimis (d.m.)investor will have got 60/62 cents back as capital. Are ANZ and Securities Commission counting the 8% p.a. interest for up to 5 years as part of the return (5 x 8% x 60 cents = 24 cents). This is a bit dirty as (1) ANZ should count only teh excess interest bit and (2) as financially literate people, why didn't they PV the figure?

If that is the case then does this mean a d.m investor can expect to get another 11 cents?

Some more detail of the likely calculation would be appreciated.
On 22 July 2010 at 9:39 am The Spin Doctor said:
60 cents x 8.3% x 5 years = 25 cents

Total = 85 cents + say 10 cents from this latest payout = 95 cents.

Abracadabra! And now for my next trick..............

"We apologise to those investors who FELT we had MISINFORMED them" = "We feel sorry for you if you were stupid enough to believe us when we told you these products were low to moderate risk".

Move over Dr Edwards, there's a new Spin Doctor in town!
Commenting is closed

 

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