The receivers of Ross Asset Management say they don’t expect to locate any further assets of significant value above the miniscule amount already found, after speaking to principal David Ross, who was released from hospital this week having received compulsory treatment under the Mental Health Act.
The receivers said the news would be extremely disappointing for the 900-odd investors who believed they had assets worth an average of half a million dollars each invested under Ross.
The Financial Markets Authority froze Ross’ assets earlier this month after a number of investors complained they had not been able to withdraw funds several months after requesting them.
A subsequent report from receiver PwC hinted at elements of a Ponzi scheme, where investors withdrawing funds are paid out with incoming funds from new investors.
The report said often double-digit returns were likely exaggerated or fictitious, and that they could only locate NZ$10 million of actual investments out of purported investments of NZ$450 million in Australia, Canada, the US, Europe and New Zealand. On Thursday, the receivers said they had now been able to locate NZ$11 million of actual investments.
“Following the release of Mr David Ross from hospital yesterday, the Receivers and Managers have been able to meet with Mr Ross this afternoon. The purpose of the meeting was to confirm the financial position of each of the entities to which the Receivers have been appointed to,” the receivers said in a statement on Thursday.
“Mr Ross has been fully cooperative in answering the Receivers' and Managers' questions. Mr Ross and the Receivers reviewed the Report submitted to the High Court on 13 November 2012,” the receivers said.
“Based on this meeting, the Receivers and Managers do not expect to locate any further assets of significant value within the Ross Group (In Receivership). The Receivers and Managers acknowledge this will be extremely disappointing news for investors.
“Further work will now be focused on finalising the collection of information from brokers by the Receivers and Managers, and reporting to the Court this Monday on proposed next steps.”
Yesterday Ross' lawyers, Chapman Tripp, issued a brief statement saying he had been released from hospital and would cooperate fully with PwC, the FMA and Serious Fraud Office investigations.
In an earlier letter to investors on Thursday, the receivers had said while they expected the NZ$11 million figure to increase, "regrettably, based on the current information we have, we do not expect any increases to be significant, unless our inquiries of Mr Ross identify significant additional assets."
"It should be noted that many of the shares identified to date are held in smaller publicly listed companies that can have a high level of price volatility or that may be infrequently traded. As a result of these factors, there remains a degree of uncertainty over the timing and level of any final realisations from the holdings. It is possible that the final sale value of the portfolio may be somewhat less than the figure stated above and may not be realisable for some time."