Credit Sails & Forsyth Barr

[Balance]

http://www.stuff.co.nz/business/8112415/Measure-us-by-the-outcome

Snatching defeat from the jaws of victory is the best description of Forbar's attempt to justify selling such a complex credit product to Mum and Dad investors.

"We still don't believe we misrepresented the investment," he says. "We get the anger and frustration of investors who lost money. We were doing stuff [to get a solution], we just weren't able to come out and tell everyone what we were doing and put everything at risk."

Seems like Forbar has still not learnt the lesson : "Wall Street bond trading desks, staffed by people making seven figures a year, set out to coax from the brain-dead guys making high five figures the highest possible ratings for the worst possible loans."

[Stranger_Danger]

I happen to agree with FB's comment. The real danger of this settlement, the South Canterbury Finance saga, the slashing of global interest rates to help out the indebted etc etc, is it allows people to avoid the outcome of their speculative mistakes.

I read the offering document for sails and put it in the bin. I avoided SCF for similar reasons. I came into 2007 with zero debt.

Why should the greedy and stupid be bailed out, usually at the cost of the prudent and conservative?

If FB haven't learnt any lessons from the last 5 years, then they sure as hell aren't the only ones.

[POSSUM THE CAT]

.
Balance: This is why I do not use any broker that gives advice or sells their own investment products. And any research or other Investment material that comes from brokers is treated as pure Gibberish.

[Balance]

I happen to agree with FB's comment. The real danger of this settlement, the South Canterbury Finance saga, the slashing of global interest rates to help out the indebted etc etc, is it allows people to avoid the outcome of their speculative mistakes.

I read the offering document for sails and put it in the bin. I avoided SCF for similar reasons. I came into 2007 with zero debt.

Why should the greedy and stupid be bailed out, usually at the cost of the prudent and conservative?

If FB haven't learnt any lessons from the last 5 years, then they sure as hell aren't the only ones.

I agree with you re South Canterbury and the finance companies - there was definitely an element of greed involved on the part of the investors.

Credit Sails is for me different as Forbar holds itself out as a highly reputable financial entity so many of its clients were inclined to trust them.

For Forbar to be taken to task and agree to settle, but then, deny responsibility to its clients for marketing the product to them in the first place - that is different.

I can imagine the spill that Forbar's advisors were making to their clients :

"This is a AA rated product with capital protection and will pay you 8.5% p.a. Nothing else beats it in the market."

Excerpt :

Credit Sails touted an interest rate of 8.5 per cent for six years and potentially more on maturity. It was also supposed to offer capital protection and its ability to repay 100 per cent of investors' capital on maturity was rated AA by Standard & Poor's - one of the highest ratings S&P can award and considered "very strong".

[winner69]

he's a good guy this paviour-smith in doing so much to get punters money

The s from the second part of his double barrelled name belongs at the beginning of the first

A saviour he is ... deserves a knighthood eh

[Balance]

This Neil Paviour Smith guy is a shyster! Weasel words to cover his arse and that of Forsyth Barr after putting clients into Credit Sails - and attempting to walk away from responsibility when CS fell over!

Takes the moral high ground with his employee, Guy Hallwright, by sacking him for tarnishing the firm's reputation but here is Mr Smith contradicting himself over Forsyth Barr's REAL role in the whole Credit Sails debacle!

Trust this man and his firm's reputation for integrity at your own risk!

http://www.chrislee.co.nz/index.php?page=taking-stock

Excerpt : "The release of the documents from the Credit Sails compensation enquiry also raises an issue about the media.

It seems the media badly misrepresented Forsyth Barr’s current beleaguered chief, Neil Paviour-Smith, a young man with a background in National Mutual Insurance where he worked for an abbreviated time in his formative years.

Paviour-Smith was quoted four years ago, obviously inaccurately, as saying that Forsyth Barr was only the broker to the Credit Sails issue, had little to do with the development of the Credit Sails product, and was not responsible for it.

He was quoted then as presenting a strong case to discount any Forsyth Barr accountability for any prospectus misrepresentations.

Clearly he was mis-quoted for the truth was that Forsyth Barr initiated the offer, fought for it to be made, and sought to have a strong influence in the presentation of the facts.

The released Commerce Commission findings tell us that.

Paviour-Smith was quoted then as being dismissive of any Forsyth Barr liability for the product’s misrepresentation.

Clearly he was mis-quoted for he has since told investors how long and hard he has fought to get compensation for investors, despite being restrained by a blackout on comment, and how proud he is of the victory he has had by achieving this excellent outcome for investors.

It is as well that he has clarified this for one cannot infer this from the documents provided.

The Commerce Commission may feel that it alone played the hand to achieve the level of compensation and may feel it had to strong arm squealing opponents. It is of great comfort to know that Paviour-Smith was a key help to the commission."

http://www.stuff.co.nz/business/3918538/An-interview-with-Neil-Paviour-Smith

Excerpt :

" The first thing to understand, he says, is the role of lead manager and organising broker. The organising broker role is simply an NZX-related activity. We were the lead manager of the issue, that involves issue management. It's not design, it's not promoting in terms of the Securities Act definition of the word, it's not manufacturing or administration management of the product. Our role is to manage the issue of the security to the market, to liaise with brokers, to be involved in roadshow co-ordination. So there is a limit to how much you will get involved in completely reviewing every single facet of every single investment.''

"'At the end of the day it was Calyon who decided what they were going to issue in this market, and when they came to us and said 'here it is, are you prepared to be involved?' we were attracted to it."

http://www.odt.co.nz/news/business/139910/probe-brokers-role-failed-bonds

Excerpt :

"Forsyth Barr defended its role as lead manager, and there had been "no wrongdoing, in any capacity, on our part", managing director Neil Paviour-Smith said"

"Forsyth Barr had "co-ordinated" management of the issue, but it was "not responsible for marketing or what was in the offer documents", which was made by Calyon."

"He said he was "frustrated" that Calyon, the subsidiary of French investment bank Credit Agricole, "had remained silent, for whatever reasons" on the issue, when contacted by the media."

CONCLUSION : Looks to me like Calyon had enough of being painted the bad guys and spilled all to the Commerce Commission, especially Forsyth Barr's real role in developing, promoting and marketing the product.

[Xerof]

Yeah, don't ever shake his hand, you'll lose fingers, or your watch

[Anna Naum]

In keeping your account there, you are supporting Mr PS. After all for every $ earned over half goes tot he firm. The ONLY way Forbar will do anything about it all is if they see income falling.

[Anna Naum]

True, but there is not a dealing room around that everyone does not know what is going on, thus everyone at Forbar knew this product was being fed to people. Like many other examples its amazing how little people see and hear when it turns bad.

I was not saying 'never' deal with Forbar, just dont deal until they cut the rot, after all many on this forum have been quick to criticise, its another matter to actually get out of your seat and do something about it other than talk.

[Anna Naum]

Seems I am not alone in my thoughts. Todays Chris Lee Newsletter packs many punches. Waiting for copyright clearance from them before posting here.

[winner69]

Sparky .....your trusted mate / advisor is tarred with the same brush as paviior-smith ....he is part of the Forbar culture that Chris Lee is referring to ...so guilty by associating ....sorry moosie

Do admire your stance in standing by him though sparks ....however ironic that may be

[Anna Naum]

Come on Sparky, on the one hand you try to put down Chris LEe because he lost in court (or at least suggest he gets it wrong) while on the other hand after saying Forbar has acted poorly you then go one to say its OK to still deal with the firm. I think you might have been spending too much time with the laughing gas.

[Anna Naum]

Forbarr did act poorly over the Credit Sails setup and sales to clients. I also note they are reimbursing people, and it is likely they will get 85% of their capital back, which means 100% of the original investment once the interest paid out in 2007-2008 is also included. I'll take that into account when judging Forbarr too. It doesn't put the matter right, but it goes a long way, and I think it helps a lot that people who thought they lost their money will get it back.

The ONLY reason they are reimbursing people is that they knew they were going to lose the court case. There is ZERO good will on the part of Forbar in this, its simply a FACT that they did not act in accordance with the law and are having to remedy the situation.

To use your logic if I get a traffic ticket the ONLY reason I pay the fine is because I feel bad about it rather than I have been found guilty and ordered to pay.

Also they have not got there money back as you suggest, they have got a portion of it back. To add back the interest and claim it as a principle payment may work for your mates in the PR department at Forbar but the FACTS are that they have agreed to pay out approx 85% of peoples principle because they did not want to go to court where a much higher level of payment would probably have been extracted from them. The email's that have been released from Forbar show a level of contempt and disrespect for clients that would probably not have played out well for them in a court room.

[Anna Naum]

Very relaxed Sparky but thanks for your concern.

The simple fact is that Forbar have been made by the courts to pay back 85% of peoples principle. They did this to avoid having a court decide if they had acted in an illegal manner with regard to the prospectus and advice they gave clients. To suggest any other sums received by holders of sails should be included in the total is just simple hogwash. To suggest otherwise is to use a similar degree of accounting mischief as that os the Sails product itself.

[winner69]

you sound a bit wound up there sparks .... that anna getting to you .... funny if anna turned out to be guy eh

[percy]

Sparky stay with your trusted adviser.
I have dealt with a number of brokers both here and Aussie.What is most important is the relationship you have built up over time.
All NZ brokers at sometime or another have pushed rubbish.Brokers did not like FRE,but pushed Feltex.
All brokers have come out and said their preferred bank is ..... and two months later it is changed.A year later it is back to the one you own.
It is hard for brokers not to push the company line.My broker has always retained his independant view and calls things as he sees them.Sounds like your man is made of the same stuff.

[Balance]

Chris Lee accepted above market commissions for finance company debentures for years and years... he should not be pointing any fingers! Jut ask a few of his loyal clients who got burnt not so very long ago.

As for Forsyth Barr... they too have made mistakes and it seems clear from these posts this is well-known amongst the investing community.

I trust they both have learnt from their mistakes... time will tell!

Chris Lee have made some valid points regarding Forsyth Barr's appalling behavior over Credit Sails.

The most damning and repugnant is Forsyth Barr's initial defense that they were just a broker to the issue and everything really was the fault of Credit Agricole.

That was a blatant lie as we all now know. It is the moral corrupt equivalent of the Catholic Church shifting pedophile and/or sex predator priests and staff around when the Church became aware of their activities, allowing the perpetrators of those heinous acts to continue with their merry ways. That is the reason why the Catholic Church is in deep trouble - not because there were those priests but because of the attempts by the Church to hide the crimes and deny they existed.

And yes, Chris Lee is just as good at blaming others for his own inadequacies as a financial advisor. He had his own rating system for the finance companies! That's how confident (and screwed up) he was and is.

[winner69]

I trust they both have learnt from their mistakes... time will tell!

Do leopards ever change their spots?

Maybe a few trusted well being individuals in the game who genuinely have clients interests at heart but the industry as a whole is one big rort with self interests core to their greed

[Balance]

Balance, I did not know that Lee was advising people on finance companies with his own system. What was his track record?

So bad that he wiped his rating system from any mention in his web-site.

http://www.sharetrader.co.nz/showthread.php?5353-Full-credit-to-Chris-Lee

A taste of how bad Chris "I know finance companies" Lee :

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10633708&pnum=2

Excerpt : " But advice from staff at Chris Lee Sharebroking of Marine Parade at Paraparaumu Beach convinced him to renew, resulting in a big financial loss and poor prospects of getting his money back.

Chris Lee, the managing director, wrote to Crone six months before it went into moratorium, saying Strategic "remains one of our preferred providers and their rates are competitive given the reinvestment bonus offered. We rate Strategic as an A-. Strategic has a very high liquidity, an investment grade rating, low bad debts and is well-placed to withstand the difficult conditions in financial markets," Lee wrote on June 13, 2008, in a letter signed by Edward Lee.

********* This is the best part **************

Edward Lee, Chris Lee's son, said yesterday his firm was reassured about Strategic's direction in 2008 when the financier said Bank of Scotland was buying into it, providing a $150 million credit line.

SO CHRIS LEE's RESEARCH CONSIST OF A REASSURANCE?

[winner69]

so the thread started off with the saviour man a 'shyster' and now the lee family being in the same boat (at least sparky has cleverly moved the argument away from his trusted financial advisor with a good standing in the community and i wasn't meaning Eoin Edgar either) ..... sort of says that the whole industry is full of 'shysters' doing the 'best' for their clients by lining their own pockets

[Balance]

Yes, I did a quick Google on Chris Lee and found the following article:

http://www.stuff.co.nz/business/industries/banking-finance/580507/The-world-according-to-Chris-Lee

The article says he failed to do due diligence on Provincial Finance.

It is good he refunded some of his clients where he or his son (or others in the firm) lost money for them.

Only in Provincial Finance. Since then, he has steadfastly blamed everything and everyone except himself and his firm.

Oh well, that's the financial services scene in NZ.

[Balance]

so the thread started off with the saviour man a 'shyster' and now the lee family being in the same boat (at least sparky has cleverly moved the argument away from his trusted financial advisor with a good standing in the community and i wasn't meaning Eoin Edgar either) ..... sort of says that the whole industry is full of 'shysters' doing the 'best' for their clients by lining their own pockets

The sins of the father?

Forsyth Barr screwed up big time on Feltex, Credit Sails and South Canterbury preference shares but not all Forbar advisors followed the 'father's' line and put clients into those bad investments. They do deserve to be assessed separately, rather than be lumped with the likes of Paviour-Smith and his forked tongue utterances.

I tend to agree with Chris Lee on this point - Paviour-Smith, as a profile member of the financial services industry, has made post-collapse comments about Credit Sails and those comments have brought disrepute to the NZX and if the NZX is half the ethical organisation it says it is, it will ask him to leave the Board. Not going to happen of course as NZ is not known to have honorable people who accept full responsibilities for their actions.

[Balance]

The old biblical saying is "Let the one without sin cast the first stone", but in this day and age I think it's better for investors to say "Do your own homework".

Here's what I say. Find someone you trust. Use their advice as a sounding board. Do your own homework.

Sound and balanced comments, STC - you are a gem (sincerely meant).

[winner69]

Sound and balanced comments, STC - you are a gem (sincerely meant).

hugs from me too sparks

[Marilyn Munroe]

Mr Lee's reference to Paviour-Smiths "short career at National Mutual" struck me as a carefully worded statement by someone who had previously been stung by a libel action.

But I could be wrong.


Boop boop de do

Marilyn

[Balance]

Mr Lee's reference to Paviour-Smiths "short career at National Mutual" struck me as a carefully worded statement by someone who had previously been stung by a libel action.

But I could be wrong.


Boop boop de do

Marilyn

Yes, very cryptic indeed from Mr Chris Lee. Wonder what that was all about.

I thought P-Smith used to work at AMP but I am obviously wrong. He definitely worked at Westpac Funds Management for a while.

[Balance]

Appreciate that. Hope you didn't mind my erection.

Haha.

Coming back to the ethics and practices in the broking and funds management industry :


There were/are certain establishments in Wellington which enjoy excellent patronage from brokers wining and dining some of these fund managers.

There was a famous case of one fund manager from one of the big insurance firms being fired after he was outed for accepting the delights of ladies of the night paid for by one of the broking firms (no longer in existence) during the 1990s. In return, he gave the lion share of the funds' business to the broking firm! I remember it well as one of the Dominion Post journalist wanted to publish the story at that time but was warned off by the big bad broking firm.

[Balance]

Meanwhile, Forsyth Barr must be wishing that their INVOLVEMENT IN FELTEX WOULD JUST GO AWAY.

Nightmare after nightmare for Mr P-Smith?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10849565

[Xerof]

I thought P-Smith used to work at AMP but I am obviously wrong. He definitely worked at Westpac Funds Management for a while.

I think you're a generation off; his father (and his uncle actually) worked at AMP during the 70's/80's

[Balance]

I think you're a generation off; his father (and his uncle actually) worked at AMP during the 70's/80's

Now you have got me bluffed! His uncle is actually his father or his father is actually his uncle?

Sorry - could not help myself.

[Xerof]

You might have to ask his mother for confirmation.......:eek2:

[Huskeez]

Seems somewhat relevant http://www.youtube.com/watch?v=zqa-jSuXmYw