Feltex - Credit Suisse, First NZ Capital & Forsyth Barr Despicable Action

[Balance]

http://www.stuff.co.nz/business/industries/8467223/Feltex-claims-to-be-heard

Whether the shareholders have a valid case or not to claim damages and compensation from the promotors, brokers and directors of Feltex should be argued in court.

What the defendants have done so far is despicable - attempting to stop the case from being heard in court rather than give those who have lost millions an opportunity to be heard in court.

Classic case of the fat cats using the billions they have extracted by various means from the investing public to try and deny justice be heard.

[Balance]

http://www.interest.co.nz/news/53201/why-five-directors-failed-carpet-maker-feltex-are-still-gun

Worth reading lest we forget about how easy it is in NZ for companies and directors to get away with misleading the market and investors.

Excerpts :

"The directors don't deny that Feltex's financial statements for the half-year to December 31, 2005 - issued on February 20, 2006 - recorded its ANZ debts as non-current when they should have been recorded as current, meaning the money owed was due for repayment within 12 months. And nor do they deny that the financial statements didn't record Feltex had an un-remedied covenant breach with ANZ when this should have been noted."

[Balance]

The issue that stuffed me and that I'm pretty miffed about ... Don't get mad - get even!

I wonder if Forsyth Barr will turn on Feltex management and directors to safeguard its own hide when the case eventually gets to court.

Neil Paviour-Smith is clearly of the view that his firm was misled by Feltex. But after Credit Sails where he denied any responsibility and then, his firm was found to have been complicit in every way possible to entice investors into the issue, I guess nobody is going to believe him?

He must be wondering when the nightmare is going to end.

Broker: We blew it on Feltex
26 June 2005
By GREG NINNESS and GARRY SHEERAN

Should brokers involved in floats also be touting the shares to clients? Investors ask the hard one after a share price went from $1.70 to 39c.


Sharebroker Forsyth Barr has admitted it was wrong in recommending Feltex Carpets to its clients.

"I'm not trying to excuse the fact that our recommendation has clearly been wrong," Forsyth Barr managing director Neil Paviour-Smith said.

The company played a leading role in the disastrous Feltex float, and many of its clients have suffered substantial losses as a result of its recommendations to buy shares in the company.

It was joint lead manager with First NZ Capital in last year's float and NZX listing, and was instrumental in the book building process which set the offer price at $1.70 a share. It also promoted Feltex shares as a "buy" through its weekly client newsletters.

Forsyth Barr clients own at least 16 million Feltex shares.

When Feltex announced the first of two major profit downgrades, on April 1, Forsyth Barr changed its recommendation to "accumulate," a position it maintained for three weeks until it changed again, to "hold."

AdvertisementAdvertisementThe Feltex share price collapsed this month, trading as low as 39c, when it was revealed that the company faced big trading difficulties. Chief executive Sam Magill is to leave by the end of the year.

While accepting that Forsyth Barr got it wrong, Paviour-Smith points the finger of blame back at Feltex.

"You are reliant on what you are told by the company," he said.

"When the company's telling you that everything's on track, it's a big call in a continuous disclosure world to go out and say 'That's clearly wrong, we'll forecast something different'.

"You rely on the quality of information you are given by the company.

"So when it turns out as in this case that the numbers that have been provided are so different to what's actually happening, then that's going to flow to your research and you'll get it wrong."

[winner69]

They obviously didn't use the good old Z-Altman solvency test before recommending it to their clients ....or putting their clients money in

[Balance]

A bit of a beat up by the media but nevertheless, shows that only Class Action or authoritative action will bring justice and compensation to investors.

Pertinent excerpt from article below : "Credit SaILS was among four investments removed from the portfolio within a year because they fell over. Included were the high profile Feltex, Strategic Finance and Babcock & Brown failures."

Looks to me like Forsyth Barr have been using their clients' portfolio to stuff up on corporate issues - plenty of fees for Forsyth Barr and investors take all the risk, and Forsyth Barr takes all the fees and cream.

Investors lose faith in firm
WILMA MCCORKINDALE IN DUNEDIN
Last updated 12:01 27/03/2013

Some out-of-pocket Dunedin investors bitten by Forsyth Barr-led Credit SaILS investment, say a settlement negotiated by the Commerce Commission is better than nothing.

Sold in 2006 with the prospect of raising 8.5 per cent interest income and capital protection, Credit SaILS raised $91.5 million through New Zealand investors, but failed in 2008.

An investigation by the Commerce Commission found investment advice on Credit SaILS debt securities was "misleading and deceptive". Credit SaILS were "highly complex and unsuitable for the average investor", something the companies should have known.

The companies promoting Credit SaILS disagreed with the commission's views and said any claim for breach of the Fair Trading Act would be strenuously defended. The commission decided a better outcome for investors would be a voluntary scheme to compensate investors. That settlement scheme establishes a $60m fund from which eligible investors will be substantially reimbursed.

Eligible investors will receive around $850 for every $1000 they lost, with payments ranging from $132 to $2.5 million.

While some Dunedin investors are philosophical about the loss, others said they would not deal with Forsyth Barr again. One retired man, who didn't want to be named, said investments were supposed to go into a conservative discretionary portfolio. In other words, Forsyth Barr chose the investments, providing they were low risk. But the firm placed $20,000 of his money inthe high-risk Credit SaILS.

The investor found out about the loss via a letter from Forsyth Barr, telling him the value of the investment had plummeted to zero. Credit SaILS was among four investments removed from the portfolio within a year because they fell over.

Included were the high profile Feltex, Strategic Finance and Babcock & Brown failures.

"If you get three or four in a row, you really have to start questioning."

The investor supposed the settlement reached by the Commerce Commission was better than nothing.

Another investor, aged 70-plus, said Forsyth Barr invested $30,000 of his savings into Credit SaILS. He also lost money in Feltex, through Forsyth Barr. He believed the Credit SaILS settlement was as good as one could hope for.

In 2009, the then president of the Otago-Taieri A&P Society, Kelly Allison said the society avoided risky investments but had taken the advice of Forsyth Barr to invest in Credit SaILS ($150,000).

This week, current president Steve Quin said the society was agreeing to the Credit SaILS settlement and holding no grudges against Forsyth Barr. "The society saw the payout as a satisfactory result," he said.


Investors can verify the settlement letter they received was genuine by telephoning the Public Trust on 0800 003 018.

Earlier this month, Forsyth Barr managing director Neil Paviour-Smith said the firm had taken responsibility for its part in Credit SaILS by its contribution to the $60m settlement fund.

[Dubdee]

I think there is a lot of selective memory regarding Forsyth Barr and CDOs generally. There were quite a number of CDOs that produced satisfactory outcomes for investors such as Generator Bonds (led by Macquarie) HYFI 1 & 2 (led by ABN Amro), Global Credit Notes (led by Forsyth Barr).

Some are still current : PINS. Although income has been suspended on these the capital is guaranteed by Barclays and ABN. Of Course never a mention, but if either Barclays or ABN were to fail there would of course be all the accusations that ABN was mischevious and self serving.

AA meant that there was a very low probability of default not that there was no risk at all. In my view Forsyth Barr was unlucky. And If the marketing spin is a concern we really need to get real. Is there no marketing spin on Mighty river?

[Balance]

I think there is a lot of selective memory regarding Forsyth Barr and CDOs generally. There were quite a number of CDOs that produced satisfactory outcomes for investors such as Generator Bonds (led by Macquarie) HYFI 1 & 2 (led by ABN Amro), Global Credit Notes (led by Forsyth Barr).

Some are still current : PINS. Although income has been suspended on these the capital is guaranteed by Barclays and ABN. Of Course never a mention, but if either Barclays or ABN were to fail there would of course be all the accusations that ABN was mischevious and self serving.

AA meant that there was a very low probability of default not that there was no risk at all. In my view Forsyth Barr was unlucky. And If the marketing spin is a concern we really need to get real. Is there no marketing spin on Mighty river?

No issue with marketing spin.

It is the 'Forsyth Barr was just the broker and we were not involved in structuring or arranging Credit Sails' bare faced mistruths from Mr Paviour-Smith which is the issue.

[POSSUM THE CAT]

Balance Do you work for Forsyth Barr?

[Balance]

A competitor ...

Isn't that too obvious?

Nope - I am no competitor to Forsyth Barr.

In fact, I have a lot of respect for some of the brokers in there who have had their arms twisted to put clients into Feltex, Credit Sails etc but boldly said no at the risk of their jobs.

They deserve better - which is why I put the responsibility squarely on the shoulders of the directors and management of Forsyth Barr.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10876189

Let's hope that like in Credit Sails, it is possible for the Commerce Commission to take on these despicable fat cats who grow rich at the expense of others.

[Balance]

http://www.stuff.co.nz/business/industries/8864201/Feltex-action-swells

The fat cats are still at it - wanting shareholders to take individual cases against the mighty Credit Suisse who made tens of millions of dollars from Feltex and so is trying to use its financial muscle to deny justice (shareholders' day in court) to shareholders.

Scumbag is too kind a word for these Swiss *ankers who were happy to rob the Jews even when they were being gassed by Hitler.

http://www.pbs.org/newshour/bb/europe/july-dec98/swiss_8-13.html