Halifaxonline.co.nz in administration (dedicated thread)

Hi all,

So, just got the news just less than 2 days late. I know some of you, like u/tipsy, u/babymonster and u/bull on this thread probably have accounts there, plus probably have international shares. Personally, I've been in cash (US$) since mid September (thinking I did well......) and now this.

I've emailed halifaxnz@linkmarketservices.com.au to see where I stand and will update when I hear back.

The news about where we stand is pretty much zero, with the administrators being not exactly forthcoming with where around 4000 users/investors stand.

Let us know what you've heard or know.

Where we stand with the administrators ferrierhodgson.com

anyone going to the meeting on 7th?

i am not sure how to fill out the POD form... i have two accounts, initially an AU account but was told the switching to a NZ account a few months ago.. both have share holding and a bit of cash.. i guess i need two POD forms..

but am i creditor or secure creditor? emailed the address above but no reply...

Here is a faq from the administrators https://www.dropbox.com/s/e79zugo75b...20FAQ.PDF?dl=0

I did speak to someone I know at Halifax, and he was pretty much in the dark, turned up on Monday and was told it was all over, all records and books were removed from his possession. He did say all client accounts were segregated but I don't think that will mean much if there's a massive shortfall somewhere. I guess it's up to the administrators as to what happens with the funds.

Not a great situation really and feel for those that had cash sitting around. I think even transferring shares from a broker under administration maybe tricky? And what to do with any open positions? You can close them but then that cash will obviously be frozen.

Quote:

---

Originally Posted by tipsy

Here is a faq from the administrators https://www.dropbox.com/s/e79zugo75b...20FAQ.PDF?dl=0

I did speak to someone I know at Halifax, and he was pretty much in the dark, turned up on Monday and was told it was all over, all records and books were removed from his possession. He did say all client accounts were segregated but I don't think that will mean much if there's a massive shortfall somewhere. I guess it's up to the administrators as to what happens with the funds.

Not a great situation really and feel for those that had cash sitting around. I think even transferring shares from a broker under administration maybe tricky? And what to do with any open positions? You can close them but then that cash will obviously be frozen.

---

This is awful. Thanks for posting the link to the FAQ's.
In them No. 7 states "Link Market Services will issue proofs of debt (POD) and proxy forms relating to each individual account via email to investors on 29 November 2018".
Has anyone received this email ? I haven't.

https://www.ferrierhodgson.com/au/-/...ember-2018.pdf
New FAQ. I see it only talks about Australian clients
"What communications should I expect to receive?

On 27 November 2018, Link Market Services issued proofs of debt (POD) and proxy forms relating to each individual account via email to Australian investors. If you hold more than one account, you will have received a separate POD and proxy for each account. These forms will contain your user ID number. "

Are people of the understanding that our shareholdings are protected (held by a third party custodian) and only our cash is at risk? I emailed the linkmarketservices email address last week but still haven't had a reply.

I read the agreement we signed, it all seemed in favour of Halifax....sadly.
It’s not an easy read, will go through it again tomorrow.
And then there is the Australian vs NZ piece as well.
As a lay person, hard to understand.
:mad ;:

I am confused here. It seems the account number I use belongs to Australian Halifax investment service (UXXXXXX). But the NZ's POD form have UserID = 0.. I manually corrected the userID (crossed and hand wrote one). Not sure if this is accepted...:(

i listened to the webcast a bit yesterday, there are about 10-20mil deficit out of a total 210mil client equity and cash.
the process can be very long, as the administrator often need to seek court decision.
clients cash and shares are not totally safe, because the money to buy share went through a few bank account.. also, depending on court decision, it's likely all clients will share this deficit, and the cost of administration and court fee.
the halifax asia is not part of the administration and that made things more complicated.
a few competitors has asked if they can buy out halifax.
by the time i am off, they are still arguing the resolution regarding replacing the administrator and whether or no setting up the inspection committee.
good luck

https://www.ferrierhodgson.com/au/-/...ember-2018.pdf

A bit more information here from the Aussie meeting yesterday. They said that we would be able to listen to the meeting afterwards.....but so far I can not see a link.
I am hoping to be able to listen in tomorrow to the NZ meeting.
Very sad.

I was told to use the Au form and just enter correct user name. I was also told to check creditor even though I am an investor.

Just finished listening to the NZ Creditors meeting webcast.......Apparently Halifax NZ was/is solvent but is owned 70% by Halifax Australia. There is a slight possibility that Halifax NZ could be dropped from Administration and resume trading on its own, or there is also the possibility that Halifax NZ could be bought out or bought in by other investors and continue operations, or it could be dragged down by the mess that seems to be mostly in Australia. It was also suggested that investors on the TWS platform are least affected and most secure, and could be first in line to get their assets returned.....Lots of maybes and ifs but better news than our worst fears generated.

New updates - sounds like co-mingling of accounts is confirmed...

https://www.ferrierhodgson.com/au/-/media/ferrier/files/documents/corp-recovery-matters/halifax-investment-services/investor-faq-14-january-2019.pdf

- How was this allowed to happen? i.e. NZ FMA doing their job correctly?
- How did an audit not spot this?
- Is there grounds for (criminal?) damages here?

Administrators funding application to the Aus court - https://www.ferrierhodgson.com/au/-/...pplication.pdf

Got a reply from the FMA about this situation:

"I will begin by explaining the FMA’s role as a regulator. The FMA’s vision is to promote and facilitate the development of fair, efficient and transparent financial markets. As a risk-based conduct regulator, we focus our resources on conduct that we think poses the most significant risk to achieving this objective.

To become a licensed derivatives issuer (DI), as Halifax NZ did, they must first meet the eligibility criteria set out in the Financial Markets Conduct Act 2013 (FMCA). Expectations around the criteria are described in the DI minimum standards.

DI minimum standards: https://fma.govt.nz/assets/Licensing...ce-part-b5.pdf

If granted a licence, as well as maintaining these minimum standards they must also meet the standard conditions.

Standard conditions: https://fma.govt.nz/assets/Complianc...r-licences.pdf

A licence does not mean that a business is immune from getting into financial difficulties. It does however mean that we can monitor, engage and have a greater level of oversight into the affairs of a business than a business that is unlicensed. This then allows us to monitor licensed entities with a risk-based approach.

We recommend that investors contact the administrators, Ferrier Hodgson, directly with any questions regarding the voluntary administration of Halifax:"

Thanks for posting this NZmagpie. I have limited internet at the moment and am unable to keep a close eye on things at the moment.

Appreciated.
RTM.

Quote:

---

Originally Posted by Chester

Just finished listening to the NZ Creditors meeting webcast.......Apparently Halifax NZ was/is solvent but is owned 70% by Halifax Australia. There is a slight possibility that Halifax NZ could be dropped from Administration and resume trading on its own, or there is also the possibility that Halifax NZ could be bought out or bought in by other investors and continue operations, or it could be dragged down by the mess that seems to be mostly in Australia. It was also suggested that investors on the TWS platform are least affected and most secure, and could be first in line to get their assets returned.....Lots of maybes and ifs but better news than our worst fears generated.

---

Lets hope its this scenario for me personally as prior to the collapse i hadent traded for 2 months and held Aussie stock via Hallifax NZ but silly me thought i actually owened these shares under my name but had forgotten to question myself as to why i didnt have an SRN shareholder cert number lol - It was also suggested that investors on the TWS platform are least affected and most secure, and could be first in line to get their assets returned.....Lots of maybes and ifs but better news than our worst fears generated."

Haha Schumacher, yeah I also thought that I had been buying shares in my name. I started trading through Halifax TWS in order to avoid bank fees when loading funds to My interactive Brokers account based in Hong Kong. I was buying highly speculative Canadian mining shares and was prepared for some losses. The irony is that the stocks have done pretty well and I’ve been wiped out by an Australian ‘counter party’ that I was not aware I had a relationship with - I really must start reading those user agreements!

Anyone seen any updates on the status of TWS? My phone app now lets me place buy bids (previously close only), but I am too scared to close any sell trades as I have no idea where my funds will end up.

I’m kinda amazed at how little news this fiasco has generated- it would seem that the Australian division has been fraudulently using client funds for trading - I believe that over $200 million in client funds are currently frozen!

http://www.scoop.co.nz/stories/BU190...lifax-mess.htm
Looks like a real mess. Good luck to all involved.

Further to my little rant above regarding dodgy dealings - the story now includes a Bentley and a 3.4 million payout to two directors the day before administration...

http://www.sharechat.co.nz/article/0...ifax-mess.html

What also concerns me is could this happen to other companies as well, such as FNZC, Craigs ? I guess situation is different there as the shares with say Direct Broking are held in ones own name, and not with a custodial service. So exposure would just be the cash . Does this sound correct ?

What a mess.

This is exactly my concern too. Is my ASB share trading account exposed to the dreaded counter-party risk should the parent Bank get into strife?

Basically this seems to be akin to a ‘bail-in’ situation similar to that prescribed by the Open Bank Resolution where depositors become responsible for the shortfalls created a bank.

Does anyone know of an online service that provides the equivalent of a share certificate? I think we all got rogered here by our transactions all being pooled under the Halifax account?! Any advice would be welcomed.

I checked out the Halifax software but wasnt impressed and so lost interest in them.

Always get stuff you buy registered in your own name if at all possible. Sure CFD's cant be , and overseas holdings tend to be custodial but dont have to be (I think)

anyone went to the 2nd meeting?

No but there is a good podcast of the meeting on the administrators website https://www.ferrierhodgson.com/au/cr...ealand-limited

Very frustrating as an IB user - we are getting shafted simply because our funds passed through an (illegally) pooled multi-platform account on the way to our brokerage account. This account was being siphoned by the Bentley-leasing lizard in Australia to pay operating expenses. With no intention on our part, we have ended up using 10 cents of someone else’s money for every dollar transferred to the IB platform.

BBY clients one step closer to finding out their fate four years after the collapse

https://www.abc.net.au/news/2019-05-...ction=business

i had a account with BBY but was fortunate to have moved my funds a yr before demise. do not have funds with halifax but wonder if this means halifax situation will drag on for yrs like BBY

This looks hopeful for those affected
http://www.sharechat.co.nz/article/2...September+2019

Just been through the KPMG Investor Update - 24 Aug 2020

Is this for real ? Seems unbelievable to me ? Aren't these the guys the same ones who caused the issue ? Lets say they are successful....will we then need to approach them, as the Majority Shareholders, for our share of the money that might be transferred to them ? Or do they just pop it in their bank and walk away ? What to do ? Trust the process ? Any thoughts ?

"The Liquidators understand the argument, in a very short form, put forward by the Majority Shareholders is that clients of Halifax AU who paid the full purchase price to Halifax AU in respect of shares were not beneficial owners of those shares but rather had contractual entitlements as if they had entered into “contracts for difference” in respect of which Halifax AU was the counter party. This is, according to the Majority Shareholders, even though investors may have believed that they were entering into transactions to acquire shares. As a consequence, investors would be creditors of Halifax AU (rather than beneficiaries of a trust). The Majority Shareholders argue that Investor claims should be valued as at 23 November 2018, with any surplus assets above the 23 November 2018 balance of the portfolio (taking into account the deficiency) to be paid to them."

I signed up to Halifax.com.au but never gave them any funds.
I checked all my correspondence with them and it was clearly CFD's they were offering

However it would appear to me that they should have held the money in trust according to this from the FMA web site https://www.fma.govt.nz/compliance/r...tives-issuers/

Licensed derivatives issuers are required to comply with the requirements contained in the FMC Regs for the handling of derivatives investor money and derivatives investor property. These include:

• Holding derivatives investor money and derivatives investor property on trust for the investor (or ensuring that derivatives investor money and derivatives investor property is held on trust for the investor).
• Ensuring that derivatives investor money is paid promptly into a specified bank to a trust account and held separate from money held by or for the derivatives issuer or offeror on its own account.
• Daily reconciliations of derivatives investor money and derivatives investor property either by an equity-based reconciliation in accordance with regulation 244A of the FMC Regs or a cash-based reconciliation in accordance with regulation 244B of the FMC Regs (an equity-based reconciliation must be carried out if the derivatives issuer carries out authorised hedging activities).
• Derivatives investor money and derivatives investor property must not be used to satisfy any liability of a derivatives issuer.
• Keeping and maintaining up-to-date records of derivatives investor money and derivatives investor property held for each investor.
• Obtaining an assurance report, within 4 months after the issuer’s balance date, that states whether, in the auditor’s opinion, the derivatives issuer’s processes, procedures, and controls relating to derivatives investor money and derivatives investor property were suitably designed and operated effectively during the accounting period (see the Supervision by us section for information about additional assurance reporting obligations).

Quote:

---

Originally Posted by peat

I signed up to Halifax.com.au but never gave them any funds.
I checked all my correspondence with them and it was clearly CFD's they were offering

However it would appear to me that they should have held the money in trust according to this from the FMA web site https://www.fma.govt.nz/compliance/r...tives-issuers/

---

I think "should" is the operative word Peat unfortunately. I signed up via NZ, I think my acct is in Australia, IB. Funded it with USA dollars and now have a spectacular mess. Only bought USA shares which I thought would be held in my name even if at a custodial service. Not so seemingly. Very ugly.

Is anyone interested in discussing this ?

After getting my head around what the judgement meant for me...and reluctantly accepting the reaming...we are now advised as below:
https://assets.kpmg/content/dam/kpmg...-june-2021.pdf

"On 15 and 16 June 2021, the solicitors for the First Defendant, Mr Loo, filed an Application for extension of
time and leave to appeal in the Federal Court of Australia and a Notice of Appeal in the Court of Appeal of
New Zealand. In summary, the First Defendant’s position is that their Honours erred in concluding that the
Liquidators of Halifax AU and Halifax NZ were justified in adopting 27 November 2018 as the date at which
the proportionate entitlements of the Investors were to be calculated (see FAQ (4) below) and that the date
at which proportionate entitlements are calculated should be as close as possible to the distribution date
and, in any event, only after the Liquidators have realised all extant investments"

I am trying to get my head around what this might mean for us. But I am not sure that I have the right information to make even a partially informed decision. Our account was down 7% Nov 18, but is up 42% Jun 21. Based on the judgement...it seems I would get back ~93% of the cash I put in. But I just can't see I have the information to figure out what Mr Loo's idea might mean. I have tried this morning to model some scenarios in a spreadsheet if anyone is interested ? The receivers seem responsive, return emails, I might need to go back to them and ask for more info ? Or is it even worth worrying about...should I simply trust the process, which is how I have managed it so far. Clearly Mr Loo is not of that opinion. Anyone have any additional ideas ?

Finally, I got a payout from the liquidators! I was an investor on the TWS platform. I'm surprised and happy to see any of it returned. My accepted claim is for approximately what I put into the portal in the 1st place, and I just received the first half of that claim.

Re: receiving actual share certificates. Still now, going through some brokers/ fund managers you don't get share certificates, like Sharesies?

I’ve used Craigs for US ETFs since the Halifax disaster, even though the transaction costs are higher as I have more faith in their custodial service- maybe faith without basis.

But even buying ETFs or smart shares or funds of kernel and NikkoAM, etc. means you still don't have the underlying share certificates. So really, are there more blow-ups to come, despite assurances from the FMA?

My 2nd tranche of the Halifax payout from the bankruptcy has just come through. So I, presumably along with others, have got back what I put invested thru the platform, plus a possibility of another 5%. After 4 years. Anything more than nothing when your investment goes bankrupt is to be cherished...

Quote:

---

Originally Posted by DTC

My 2nd tranche of the Halifax payout from the bankruptcy has just come through. So I, presumably along with others, have got back what I put invested thru the platform, plus a possibility of another 5%. After 4 years. Anything more than nothing when your investment goes bankrupt is to be cherished...

---

You have got me worried now...have just received the one earlier on this year.
Hope there are no issues for me.
What a friggin disappointing mess !

It is similar to when MF Global went bust. Aussi receivers took something like 35 mil in fees over 5 years. All clients were whole in the end but only got all by about year 4. Should never have gone through.

Quote:

---

Originally Posted by RTM

You have got me worried now...have just received the one earlier on this year.
Hope there are no issues for me.
What a friggin disappointing mess !

---

Update: Have now received second payment.
I guess that’s most of what I might expect.