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.