Warning to Du Val over misleading investors

Cash distributions from the Du Val Mortgage Fund were suspended in January when investors were told the fund would be wound up and investors’ units in the fund would be converted into shares in a new Du Val company ahead of a potential public listing.

The FMA says investors have been misled about their rights in relation to the suspension. They were told the suspension of the prominently advertised cash payments was in the context of the restructure.

However, FMA executive director, response and enforcement Paul Gregory says this was misleading as the payments were actually suspended because “Du Val’s board could not approve cash distributions, because it would leave the company unable to meet its other obligations”.

Gregory says investors were left with a misleading impression for the reasons of the suspended cash distribution and capitalisation.