Up until now, we’ve never had this story told in public, from the investor’s point of view. Now we have it. This article from South China Morning Post is an absolute must-read. Some choice quotes follow:
Covers the Ponzi aspect:
“When you did the arithmetic … the cash [coming in] was being used just to pay two things – fees and income distribution – and that is the classic Ponzi scheme,” says Rodger Bacon, chairman of Australian fund group Trilogy.
Covers the commissions aspect:
“The growth was fuelled by the greed of advisers,” says Terpilowski, describing the Managed Performance Fund as a scam. “I don’t believe that clients were aware when investing new money of the new commission levels or the redemption problems, or why would they invest?”
Covers the Independent Financial Advisors:
A spokeswoman for Thailand’s Securities and Exchange Commission (SEC) says it can find no record of a licence being granted to his firm, under either of its names, or to Wood himself. The spokeswoman says it is an offence to give investment advice without a licence in Thailand. Wood was asked by Post Magazine to provide proof that he and his firm are licensed. He did not do so.
The LM Investor Victims:
MOST INVESTORS IN THE Managed Performance Fund were never told about the redemption problems, says Graham Smith, founder of the LM Investor Victim Centre, which helps represent LM investors in Hong Kong and overseas. In many cases, the advisers disappeared the moment LM failed, he says.
Smith is trying to spearhead a global response by encouraging his 525 members to write to Australia’s prime minister and their local politicians.
The lack of diversification? Covered:
While common practice is for fund managers to diversify their holdings, the accounts show that a hefty 60 per cent of the Managed Performance Fund was tied up in one asset, a HK$1.4 billion mortgage on Maddison Estate.
Wow. Just wow.
Thanks for posting the link. Kudos to SCMP for such an informative article. After searching the internet, I couldn’t find any articles by the Bangkok Post regarding LMIM – wonder why?