FMA reaches $4.5m settlement with finance company trustee Prince and Partners
Monday, 28 August 2017
The trustee of a finance company which collapsed owing about $7.8 million to more than 100 investors has reached a $4.5m settlement after admitting a 'series of failings'.
The Financial Markets Authority brought civil proceedings against Prince and Partners Trustee Company for its role as trustee of Viaduct Capital.
Viaduct went into receivership in 2010, and the FMA alleged Prince had failed to carry out its functions with the care, diligence and skill expected of a reasonably competent and prudent trustee.
On Monday, the FMA said a $4.5m settlement between the parties had been approved by the High Court.
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The case was due to be heard earlier this month, but Prince has admitted to a 'series of failings' as part of the settlement.
FMA head of enforcement Karen Chang said supervisors had an important role to play in protecting investors and promoting confidence in financial markets.
'The trustee's role was to protect the interests of investors and Prince was supposed to act as an independent watchdog over Viaduct.
'It failed to do so, despite obvious concerns with the proposed acquisition of Viaduct, and the red flags raised by PWC and the withdrawal of the Crown Guarantee.'
It was the first time the FMA had brought a case under a section of the FMA Act which let it exercise the rights of action of investors.
Of the $7.8m Viaduct owed when it went into receivership in 2010, $7.3m was covered by the Crown Guarantee and repaid by Treasury.
The remaining $515,000 was owed to investors who invested in Viaduct after the Crown Guarantee was withdrawn.
In May, the FMA's criminal case relating to the collapse of Viaduct was aborted because an 'unprecedented' amount of information was given to the defendants late during a trial which had lasted nine months
The charges were also brought in relation to the collapse of another finance company, Mutual Finance.
Paul Bublitz and co-defendants Richard Blackwood, Bruce McKay and Lance Morrison denied charges of theft by a person in a special relationship, making false statements to a trustee, and false statements by a promoter.
Another defendant, Peter Chevin, pleaded guilty to 10 charges of theft by a person in a special relationship on the morning before the trial began.
New charges have been laid against Bublitz, Blackwood and McKay, but the defendants have opposed the laying of those charges.