The group, which is called the Advisers’ Committee for Investors, was established following the collapse of Australian property investment manager LMIM.
Since being formed by Magellan, Financial Partners and Mondial in June, the group has raised enough capital to appoint legal representation in Australia, helped to establish a reserve company and won one of many ongoing legal actions against former fund trustee FTI.
In addition, the group has been instrumental in arranging talks between the different parties involved.
The group is now looking to raise further capital from clients and advisers as part of an action plan to generate as much value for investors as possible.
Contacting clients
Last week, members of the Middle East division of the ACI, which includes ACI founder Mondial chief executive Sean Kelleher as well as Globaleye and Holborn Assets, began writing to investors to ask for a contribution roughly equivalent to 10% of their initial investment (minimum of $1,000) and for their written support for action being taken on their behalf by the ACI.
Investors were also given the option of offering their support for the action, without providing additional funds, on the understanding that those who do contribute will be paid an additional “risk premium” if action is successful.
Kelleher told International Adviser that notes annotated by Supreme Court of Queensland judge Justice Dalton on a recent judgement, “indicated she would be sympathetic to an investor-led initiative”.
In September, investors were warned by KordaMentha, the trustee of the Managed Performance Fund – the largest LMIM fund with around AUS$400m invested at its peak – that they are likely to lose 95% of their initial investment.
However, Kelleher said if the ACI is successful in raising enough funds and getting the support of the majority of investors, a 95% loss does not have to be the outcome, but that this depends on advisers facing up clients.
“Advisers will have made more money than their clients by advising on this fund and it is time for them to stand up and take responsibility,” said Kelleher. “Those who do not contact clients lack a duty of care.”
A document seen by IA shows in the Middle East alone, 28 advisory firms put clients’ money into the Managed Performance Fund, representing a quarter of the AUS$400m total assets invested.
