Financial Markets Authority

Dodgy ratbag Forex scamsters in liquidation

The dodgy ratbag forex scamsters Phoenix Forex have gone into liquidation.

We have featured these ratbags extensively on the blog. Unfortunately it appears that many people may well lose their money entirely.

Phoenix Forex, which the Financial Markets Authority issued a warning about in August, has been placed in liquidation.

Foreign exchange software company Phoenix Forex was the New Zealand distributor of the OakFX foreign exchange trading system, which customers paid up to $25,000 to access.

At the end of August, the FMA warned the public about doing business with the Auckland-based company or buying the OakFX system.  Read more »

The Phoenix ratbags’ carnage continues

We have blogged extensively about the ratbags who sold the dodgy OakFX trading system.

Their victims are piling up quickly.

A swanky Ponsonby eatery has collapsed owing nearly $5 million after its major shareholder’s dubious foreign exchange software became the subject of a Financial Markets Authority warning.

Shareholders of Restaurant, which operated Auckland’s Brownstone restaurant, appointed liquidators Christopher McCullagh and Stephen Lawrence of PKF on September 23.

According to the first liquidators’ report, the plush, fine-dining restaurant, formerly known as Prohibition and Nostalgia, has been beset by problems since opening in 2008.

Director Colin Gardner told liquidators “unfavourable rumours, in particular that it was owned by the Russian mafia or that it was a “gentleman’s club” had contributed to poor trading.

Gardner told liquidators he had poured $4.8m into financing the business, and had entered into a scheme of arrangement in October 2011 with creditors to buy time to raise new share capital.  Read more »

Victory for Whaleoil – The Truth shall set you free

This blog has extensively covered the dodgy ratbags selling the OakFX system. Last week the FMA warned people about the claims by the company, and other media jumped on board, several months after I alerted people via Truth and my blog to their carry on.

Matt Nippert from Fairfax has had a larrup at them too:

A firm offering controversial computerised foreign-exchange trading is blaming the Financial Markets Authority for causing panic amongst its investors.

The market regulator last week urged investors to use “caution” before putting their money with unregistered company Phoenix Forex, and particularly its trading software OakFX.

The FMA said claims the software, costing up to $25,000 in subscription fees, could generate returns of 50 per cent per year were unrealistic.

Phoenix Forex is directed and majority-owned by Kendall Twigden. Former business journalist-turned stock-tipper David McEwen is also a shareholder.

Former bankrupt Mark Brewer is described as the “sales legend” for the firm, who advertised heavily on radio and paid inducement for accountants to refer their clients.  Read more »

NBR covers the ratbag Forex guys, weasel excuses flow

Following on from my post about the ratbags at OakFX the NBR has covered the story and boy did they get the run around from David McEwen.

Financial reporter turned investment advisor David McEwen is trying to distance himself from a foreign exchange operator the Financial Markets Authority is warning people to be wary of.

Phoenix Forex is directed by Kendall Twigden.

Phoenix shareholders are Ms Twigden (20%), Craig Campbell (70%) and Mr McEwen (10%).

Mr McEwen offers investment advice through his McEwen Investment Report weekly newsletter and private client portfolio management services through McEwen Wealth Management.

Part of the Phoenix sales pitch for OakFX included an article in NZ Investor Magazine praising the product. That article was written by Mr McEwen.

Mr McEwen tells NBR ONLINE he has not been party to the recent interaction with FMA, as he is not a director of the company.

He says he has been a “fond follower” of the product for the past two years but he is not involved it selling it.

“I don’t sell the product, I don’t receive a commission or anything like that. But I do have clients that own it and I track their performance.

“A lot of them are making very good returns relative to the risk.”

Pressed about his involvement in the firm, Mr McEwen said he was simply a minority shareholder in the group.   Read more »

Vindication – FMA issues warning against dodgy Forex trading system

When I was at Truth I ran a couple of stories about some dodgy ratbags that operate under the name of OakFX. Here is the first one I ran:

Truth Page4 Mar28

Well, now I am vindicated with the Financial Markets Authority issuing a warning about them.  Read more »

Is Radio NZ seconding Herald staff?

Who would know what Radio NZ is trying to say with this news?

Perhaps Bryce Johns has managed to get some of his “decent journalists, trained and skilled” new positions at Radio New Zealand.

RNZ

Read more »

Hotchin smacks the FMA on the nose

ᔄ NBR

Good to see Mark Hotchin finally fighting back against the leaking, whinging FMA. Usually they are the ones first to the news with sneaky little leaks about the Hanover case but this time Mark Hotchin has got his licks in first.

Former Hanover Finance boss Mark Hotchin is challenging the Financial Markets Authority to prove the failed finance company’s investors lost out for any other reason than the collapse in the New Zealand property market and the global financial crisis.

Mr Hotchin took the unusual step of releasing a press statement which he said summarised a Statement of Defence filed with the Auckland High Court on July 31, in response to charges laid by the FMA from an investigation that began more than four years ago.

Hanover froze repayments in July 2008 on $296.5 million of investors’ funds, at a time when it claimed $550 million of assets.

The FMA action only pursues redress for depositors who invested $35 million with Hanover between December 2007 and July 2008.

Remember too that Mark Hotchin, alone, still has all his assets frozen, despite there not being a single criminal charge laid against him. The FMA after years of investigation could only struggle to file a civil case. Despite what the NBR saysWhile the media hated on Mark Hotchin they are literally sucking off Kim Dotcom and lapping up everything he says….and Dotcom actually is charged with crimes, and has been prosecuted for crimes in the past.

You really do have to wonder why the FMA does not seek to lock up the assets of the other involved in the case. I should think that Mark Hotchin has a good case for victimisation.

How are they possibly going to do that?

ᔄ NZ Herald

A judge has told a jury to ignore the mad clamourings of the media intent on lynching directors of finance companies:

A High Court judge has told the jury trying Carol Braithwaite to ignore any prejudices they have about finance companies or finance company directors.

Braithwaite – the former wife of jailed National Finance boss Trevor Ludlow – is the first director from a failed New Zealand finance company to have a case before a jury.

As a National Finance director, she faces one charge of making untrue statements in a company prospectus. She has pleaded not guilty and will defend the charge on the basis that she believed at the time the prospectus was correct.

The charge, laid by the Financial Markets Authority, carries a maximum penalty of five years in prison or fines of up to $300,000.

Justice Pamela Andrews told the jury of 12 that there is no room for prejudice in the case, which started today.

“This trial is essentially about a finance company. You may have heard or read about trials of those who are directors of finance company, you may know someone who has invested in a finance company and you may have your own views about finance companies.

The media in New Zealand have run campaigns against finance directors, especially one director who to this date remains un-charged by any authority save a civil action by the FMA. Mark Hotchin and other Hanover directors have been hounded from the country despite not a single criminal charge ever being laid.

Not only that his assets remain frozen in a case of judicial travesty. Some outlets even gratuitously use the man’s name in order to make their bonuses for traffic from their website so search engine friendly is his name.

How on earth then are jurors in another case actually before a court supposed to put aside any prejudices regarding finance company directors when our media has held print, radio and television virtual lynchings of the same?

Cactus Kate on the FMA

Cactus Kate has an opinion piece in the NZ Herald this morning excoriating the dirty underhand way the FMA is dealing with the Hanover case.

Fittingly on April Fools morning, it came down to Sean Hughes from the Financial Markets Authority chest-beating civil proceedings against six Hanover directors and loosely termed “promoters”.

At least one individual claims to have not received the 69 pages of Statement of Claim at the time of Hughes’ very public announcement.

Hanover was deliberately sensationalised by leaks, drip-fed to media and anti-big business bloggers as their conduit. Should you attempt blogging balance, within minutes hatemail hit the inbox invoking your deceased Grandmother’s legacy.

It was billed as the FMA’s show-stopper but sizzled like cold sausages on the Mad Butcher’s gasless barbecue to just $35 million from a 7-month timeframe, an unknown tiny percentage of investors with civil proceedings involving alleged prospectus violations that unless a suitably vintaged professional, no one has a hope of comprehending.

That is interesting, because just yesterday the full 69 page statement of claim in the proceedings was leaked to the NBR (subscriber content)…looks like more underhand tactics from the FMA intent on running the case in the media rather than in the court room.

The FMA played a dirty game freezing whipping-boy Mark Hotchin’s assets back in December 2010. They strategically stretched the truth and patience of Justice Winkelmann in a way the writers of Shortland Street could not beat with Christmas specials as tantalising. Last year more promises until Hughes paraded himself unquestioned by business media on morning television as a big game hunter back from a shoot with the equivalent of the head of an aged tame pet goat.

It is not uncommon for regulators to play with accused through media. They know conservative lawyers advise clients to keep silent. It may be legally sage but lacks commerciality as business is all about investor confidence and telling your story first.

The FMA know the battle that goes on between client and adviser and milked it for all it is worth, knowing the first wave of bad publicity Hotchin received was almost impossible to come back from.

The moment there are market rumours of an investigation your life is effectively stalled and close to ruin.

The family ask questions, friends shun you, bankers stop taking you out in public and even the kids’ schoolteachers start gossip.

And the bottom line is after all the bluster and all the puffery and all the delays from Sean Hughes and the FMA, all they have come up with is a 69 page statement of claim and civil action against the directors and promoters of Hanover.

Cactus Kate suggests the FMA would ahve been better advised to look closely at the asset stripping and destruction wrought by Rob Alloway at Allied:

Precisely what happened to investor value since is where a more worthy FMA investigation should lie. Allied professionally due diligenced Hanover, accepted the deal, cherry picked $100 million of value off the tree and oversaw the ultimate loss of value. Allied then conveniently blamed Hanover after stripping out assets directors wished to keep.

Sean Hughes has been clear that no criminal intent was present in Hanover and pumped these civil pleadings as the “easiest” for the FMA to prove.

A civil action on behalf of a select few investors for 7 per cent of total value of funds invested.

Small Beer

ᔄ NBR

John Bowie channels Cactus Kate on Hanover:

You would have to say the Financial Markets Authority’s civil suit against the Hanover directors is something of a damp squid [sic] after a long three-year wait by out-of-pocket investors.

The anticipation of a criminal trial and the front-page-ranking of frozen Hotchin assets, as if he were the only director, has evaporated like morning dew. The small civil claim, being for a mere $35 million for which the directors may even be covered by insurance, will achieve next to nothing.

All eyes must now turn to Tim Rainey, the Auckland litigator representing something over 2500 investors, to see if he can turn up the recovery heat with his own action. But without the FMA resources to shoot home any liability, investors will doubtless not be holding their collective breath.

It would be interesting to find out how much the FMA begged Hanover to settle out of court so they could claim a victory…I guess we will never know now. The FMA talked large for more 15 months…they delayed and delayed and delayed, and this is all they have come up with, a pissy little civil action…John Bowie is right, this is small beer indeed.