Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Everyone 'swore by him'

Investors feel betrayed by failure of Ross Asset Management and its manager.

Hundreds of millions of dollars is apparently missing from David Ross' firm Ross Asset Management. Photo / Mark Mitchell
Hundreds of millions of dollars is apparently missing from David Ross' firm Ross Asset Management. Photo / Mark Mitchell

Described by investors as "magnificent and impressive" Wellington fund manager David Ross was still winning over clients on the eve of his firm's failure and some were even considering giving him more money.

Ross, who managed investments for 900 clients, has been in hospital for at least the last fortnight and his lawyer yesterday could not comment on his condition.

The fund manager's well-established firm, Ross Asset Management, is in the hands of receivers who are attempting to unravel its affairs and find hundreds of millions of dollars of apparently missing money.

See the receivers' first report on Ross Asset Management here.

Weeks before Ross' office and home were raided by the Financial Markets Authority (FMA) in early November, investors who met him were convinced their money was "as safe as houses".

An Auckland couple, who had under $100,000 with Ross, were so impressed with him after a September meeting they were thinking of upping their investment.

"Every person we approached before we put money in swore by him," said the investors, who did not want to be named.

"Everyone said he was fantastic ... we were very satisfied that he was an AFA [authorised financial adviser] and a chartered accountant. The FMA rated him as one of their licensed people. It gave me confidence," one said.

"Had he just been a one-man band with no credentials, we would have never given him any money ... I feel quite betrayed."

The couple felt aggrieved Ross' activities were not picked up by the FMA sooner.

"You had the sharemarket crash in the late 80s, then you've got the finance companies [collapse], it's just one thing after the other. This is partially why you went to people like David Ross, for expert advice ... who would trust anybody any longer?"

A separate investor, who had more than $600,000 tied up with Ross, said he now had "nothing".

"Pretty much every cent I got in my life is with them. My recent pay cheque is all I've got," the 29-year-old said.

His parents also had funds with Ross and stand to lose more than $1 million.

Despite reports investors were getting 30 per cent per annum returns from Ross, those who spoke to the Herald said yesterday this was not the case.

"That is what made it seemed feasible. You have a negative quarter and actually lose money you'd think 'how can he be lying if we're losing money'. It wasn't like we were getting 8 or 9 per cent returns every quarter. I had three quarters in a row that were all negative," an investor said.

"If he was making it all up why wouldn't he say that [returns were positive]?" the man said.

A Wellington-based investor had put in around $300,000 with Ross in 1994 and was told his investment had grown to be worth around $3 million.

The 63-year-old said Ross was extremely open with clients about their investments.

"He always seemed so honest," he said. "He said he didn't got for anything shonky, they were all solid companies ... I just believed him really, as everybody else did."

What receivers discovered

* Ross Asset Management receiver PwC has identified just $10.6 million of the $449.6 million the Wellington fund manager was believed to be controlling.
*PwC partner John Fisk says he found "characteristics of a Ponzi scheme" during the course of his investigation.
*The almost half a billion dollars apparently owed to investors is likely based on fictitious or exaggerated returns which clients were told they were entitled to, PwC says.

Were you an investor with David Ross? If so, please contact Hamish Fletcher on the email link below.

- NZ Herald

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