South Canterbury Finance Limited

[minimoke]

Roger. I think some of that is a cop out.

Of course financial advisors should be able to rely on your points.

But one thing not on your list is an advisor should have the skill to sniff out something suspect and then have the balls (or standard of ethical behaviour) not to support any company that does not alleviate those suspicions.

Joe blogs is quite able to loose his own money - he should not expect to do so when he has taken professional advise.

But at the moment our judiciary seems happy not to provide a disincentive to advisors (and the commercial sector) so i have no expectation that the standards of service and expertise will improve. It Is too easy for those involved to keep clicking the ticket which enables them to prey on the vulnerable and lazy.

[Beagle]

Roger. I think some of that is a cop out.Of course financial advisors should be able to rely on your points.

But one thing not on your list is an advisor should have the skill to sniff out something suspect and then have the balls (or standard of ethical behaviour) not to support any company that does not alleviate those suspicions.

Joe blogs is quite able to loose his own money - he should not expect to do so when he has taken professional advise.

But at the moment our judiciary seems happy not to provide a disincentive to advisors (and the commercial sector) so i have no expectation that the standards of service and expertise will improve. It Is too easy for those involved to keep clicking the ticket which enables them to prey on the vulnerable and lazy.

I disagree. If one of the big accountancy firms who have access too all the records and do a full audit and are happy with the veracity of the financial statements and attest to that, how would you expect a small financial advisory firm without access to the companies internal documents to get a better feel for it ? We are not mind readers mate nor do we have access to documents like the auditors do.
Surely financial advisors should at least in theory be able to draw some comfort from the credit rating agencies ? If extremely well paid analysts at Standard and Poors who have access to the full financial records of the company and are paid extremely well for a thorough professional opinion of same can't get credit ratings right e.g. ascribe AAA credit ratings to CDO's that are little more than a well spread collection of sub-prime loans, how would you expect for example a small suburban financial advisory firm to do better with special insights without access to detailed company records ?

On the other hand you would expect if for example a finance company had a high degree of concentration in one specific risk area like related party transactions, a disproportionate level of lending to the property development sector that finance company might be perceived as having a higher level of risk than some others and perhaps a lower level of investment in that company might be considered prudent or if there were specific risks identified that the financial advisor wasn't comfortable with (s)he might not recommend them.

The idea that financial advisors are out there to prey on the lazy and vulnerable is in my opinion a gross generalisation and misrepresentation of the business model of the vast majority of financial advisors.
In a heck of a lot of cases I think investors are simply taking a "shotgun approach" to potential liability issues and hoping some of the pellets hit the mark somewhere. I guess its only human nature that their personal point of contact, (their financial advisor) is in line for some of that flak but is it warranted... A simple case of many people wanting to shoot the messenger ?....I think so.

[minimoke]

[/B]

I disagree. If one of the big accountancy firms who have access too all the records and do a full audit and are happy with the veracity of the financial statements and attest to that, how would you expect a small financial advisory firm without access to the companies internal documents to get a better feel for it ? We are not mind readers mate nor do we have access to documents like the auditors do.

The role of some of these large accounting firms is questionable. Posters on this thread threw more light than the auditors.

Surely financial advisors should at least in theory be able to draw some comfort from the credit rating agencies ?

Some comfort yes but these ratings enable advisors to get too comfortable

how would you expect for example a small suburban financial advisory firm to do better with special insights without access to detailed company records ?

I would expect the small suburban advisor to stay out of deep water where sharks lurk

On the other hand you would expect if for example a finance company had a high degree of concentration in one specific risk area like related party transactions, a disproportionate level of lending to the property development sector that finance company might be perceived as having a higher level of risk than some others and perhaps a lower level of investment in that company might be considered prudent or if there were specific risks identified that the financial advisor wasn't comfortable with (s)he might not recommend them.

Related party lending should be a big red warning flag - I would expect an advisor to be very wary

The idea that financial advisors are out there to prey on the lazy and vulnerable is in my opinion a gross generalisation and misrepresentation of the business model of the vast majority of financial advisors.

Accepted. A gross generalisation which I retract. I should be more focused on a business model which relies upon a certain method of income generation and the maximisation of opportunities to increase that revenue.

In a heck of a lot of cases I think investors are simply taking a "shotgun approach" to potential liability issues and hoping some of the pellets hit the mark somewhere. I guess its only human nature that their personal point of contact, (their financial advisor) is in line for some of that flak but is it warranted... A simple case of many people wanting to shoot the messenger ?....I think so.

I think too many investors don't do their due diligence on their advisor. I'm trying hard not to call them lazy. But really, I'm not sure why people blindly entrust their hard earned cash to these so called advisors. Case in point - how is it that forsyth barr are still around?

[Beagle]

The role of some of these large accounting firms is questionable. Posters on this thread threw more light than the auditors. I agree.

Some comfort yes but these ratings enable advisors to get too comfortable. Yes I think there's a temptation to think that international agencies with specialist staff trained to analyse risk and with the time and experitise for company visits would do a thorough job. Whether that means financial advisors should be able to rely on them is an open question. I don't think it absolves advisors from at least having a thorough look at publicly available information and forming their own opinion.

I would expect the small suburban advisor to stay out of deep water where sharks lurk. I do.

Related party lending should be a big red warning flag - I would expect an advisor to be very waryI agree that a material degree of related party lending should put people on notice that there's materially more risk involved

Accepted. A gross generalisation which I retract. I should be more focused on a business model which relies upon a certain method of income generation and the maximisation of opportunities to increase that revenue.Big name firms tend to attract a lot of business based solely on their name. Its a tough gig for many others.


I think too many investors don't do their due diligence on their advisor. I'm trying hard not to call them lazy. But really, I'm not sure why people blindly entrust their hard earned cash to these so called advisors. Case in point - how is it that forsyth barr are still around?

Agreed. No question Forbar shot themselves in the foot in regard to Credit Sails, Feltex, and their involvement in SCF to name just three examples. I think the only reason they're still in business is because of their roots in the South Island and personal relationships their advisors have with their clients, some of whom did well before the GFC. I don't rate their analysts, down there with Morningstar in my opinion.

Not surprising that Sullivan has had to settle some civil claims. I hope the Crown law office appeal the pathetic so called sentence.

[sharer]

The role of some of these large accounting firms is questionable. Posters on this thread threw more light than the auditors.

.. I would expect the small suburban advisor to stay out of deep water where sharks lurk

.. I'm not sure why people blindly entrust their hard earned cash to these so called advisors. Case in point - how is it that forsyth barr are still around?

Roger, i agree with your posts above. Everyone tells us "DYOR" - but in reality even the really diligent amongst us simply cannot overcome the deliberate obfuscation or basic dishonesty existing in published "accounts", regardless of all the auditing certificates attached.
For this reason i also quote some of Minimoke's points above, which i also agree with.
In particular, i think it a complete waste of time & money to pay fees to Financial Providers or Sharebrokers (or to lawyers who also give life-altering advice in the privacy of their consulting rooms when we want to revise our Wills etc). As for sharebrokers, it took me far too long to recognise that they were after their own profits and not giving me accurate advice re SCF (& some others), and so i terminated my relationship with them, as the only practical thing open to me to do. This meant even greater reliance on my own very limited ability in the DYOR department, and also to recognise when it was just too hard for me to do, in which case i must disinvest from entitites i find in the too-hard basket. Some of those were shed with reluctance, as they seemed good investments; i just had to get ruthless about disposing of anything i couldn't get comfortable with. So far my new regime over the past 3 years or so has resulted in about 2.5X the previous capital value, & about 2X the annual income to be taxed. And quite a bit already shed in advance of the estate lawyers getting amongst it.
Maybe my main point is just to ask whether advice to DYOR might be the real cop-out, as there seems so much evidence that it is really not actually possible to do it well?

[winner69]

I thought was funny from Chris Lee ...and rather sad.

Just shows you that mates are mates and their network is very wide.

who financial network in nz is


Extract
AM I the only financial market participant who can see irony in a Deloittes Best Business award being judged by Samford Maier Junior and Neil Paviour-Smith?

These are the two who took the helm at South Canterbury Finance and are now in the spotlight over the question of the veracity of information provided to financial markets in 2010, regarding SCF.

Paviour-Smith is CEO of Forsyth Barr, which was forced to pay out tens of millions to Credit Sails investors, compensating for losses in a product that was ill-designed and wrongly marketed.

And these guys decide who are New Zealand’s best in various business sectors?

I do not get that. Who selects the judges?

[Beagle]

I thought was funny from Chris Lee ...and rather sad.

Just shows you that mates are mates and their network is very wide.

who financial network in nz is


Extract
AM I the only financial market participant who can see irony in a Deloittes Best Business award being judged by Samford Maier Junior and Neil Paviour-Smith?

These are the two who took the helm at South Canterbury Finance and are now in the spotlight over the question of the veracity of information provided to financial markets in 2010, regarding SCF.

Paviour-Smith is CEO of Forsyth Barr, which was forced to pay out tens of millions to Credit Sails investors, compensating for losses in a product that was ill-designed and wrongly marketed.

And these guys decide who are New Zealand’s best in various business sectors?

I do not get that. Who selects the judges?

Yep that was a real shocker although I would hasten to add that they seemed far better at recognising genuine talent than displaying it themselves...ohhh the bitter irony. Quite how these "gentlemen" still have the mana in the N.Z. financial system to be selected as judges beggars belief. Some would say they deserve only to be the judge of which cockroach was the fastest to cross the prison cell floor and I would have sympathy for that point of view.

Maybe my main point is just to ask whether advice to DYOR might be the real cop-out, as there seems so much evidence that it is really not actually possible to do it well?

DYOR - the ultimate disclaimer

[minimoke]

Bit by sorry bit this financial disaster is finally getting closed off. CAML have achieved a confidential settlement for an action brought against 4 directors in the past couple of months. Now the Financial Markets Authority has decided not to pursue SCF any further on the basis its not in the public interest. Despite a briefing by the FMA QC it still seems Chris Lee will endeavour to milk this publicity seeking opportunity for a a few months yet.

[minimoke]

I am wondering if Chris Lee is the first Financial Advisor who can loose his clients more than 100% of their investment. I see hes managing to convince people to throw in another average $200 to pursue a class action on behalf of Preferential share holders. $100,000 raised already and punters have no idea who the action will be against. I can guarantee one thing - the barristers can look forward to another Christmas bonus.

One cheery old fellah reckons he made $4,400 out of his $400 "investment" in the Babcock and Brown class action - but I thought the courts threw that one out? And shareholders have to stump up for "costs" which they may be able to avoid since theirs was a no win - no fee type arrangement. Hope they checked the small print in that contract!

[macduffy]

One cheery old fellah reckons he made $4,400 out of his $400 "investment" in the Babcock and Brown class action - but I thought the courts threw that one out? And shareholders have to stump up for "costs" which they may be able to avoid since theirs was a no win - no fee type arrangement. Hope they checked the small print in that contract!

I'm another "cheery old fellah" who "made" $4,400 out of funding - for $400 - the action that secured an advance payment from the B and B debacle. Money well spent, but we're still waiting for the bulk of our subordinated notes - which is looking increasingly doubtful as legal actions and costs drag on. None of which is helpful for SCF investors though!