There may be even less money available for Ross Asset Management's bewildered investors than first thought, its receivers have warned.
As RAM's founder and director - Wellington-based financial adviser David Ross - was released from hospital, the group's receivers PwC have released another update to his 900 investors.
The receivers said they had now uncovered a total of only $11 million, up from $10.2 million last week, but believed they would find little more money during their unravelling of Ross' affairs.
"We expect the amount [discovered] to increase further, but 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," the receivers said.
While in hospital the financial adviser had been unable to assist the receivers, who believe they had found "characteristics of a Ponzi scheme" at RAM.
Receivers are pushing for the group to be put into liquidation as the best way to maximise returns for investors and this will be raised with the High Court on November 26. But PwC warned yesterday that there may be even less than the $11 million of assets for distribution to Ross' clients - some of whom believed their investments were worth millions.
"It should be noted that many of [investor] 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," the PwC update to investors said. "As a result of these factors, there remains a degree of uncertainty over the timing and level of any final realisation from the holdings.
"It is possible that the final sale of the portfolio may be somewhat less than the figure stated above [$11 million] and may not be realisable for some time." Members of the investment community said yesterday they were shocked that Ross - who is believed to have run his firm with only a few staff - was handling investments for 900 clients.
Pathfinder Asset Management's John Berry did not believe Ross was well known in investment circles outside Wellington.
"We were amazed someone out there was managing that amount of money [$450 million] and we had never heard of them ... it was a surprise to us that there were that many people that one person appeared to be managing," he said. "How on earth do you keep the records properly without some independent accounting help or custody.
"Certainly the advisers we have spoken to are just aghast at the fact he was running money for 900 people, effectively on spreadsheets."
Numerous Ross investors have got in touch with the Herald this week and some fear they have lost their life savings.
One investor said he and his wife had been clients of David Ross since 2004 and that his father-in-law, son, brother-in-law and cousin also had funds with the financial adviser.
"Collectively we would have about $4 million invested ... this debacle has left at least two of the parties in a very precarious situation."
TREATMENT UNDER MENTAL HEALTH ACT
David Ross was released from hospital late on Wednesday after receiving compulsory treatment under the Mental Health Act for three weeks.
A statement from his lawyers (see attached) said he was unable to assist with inquiries into his company during this time but will now co-operate fully with receivers. He will also co-operate with the Serious Fraud Office - which confirmed on Monday it was investigating him - and the Financial Markets Authority, the statement said.
Rumours about Ross' condition have been swirling since the FMA raided Ross Asset Management's Wellington offices on November 2.
The Mental Health Act covers situations when it is considered a person needs treatment for mental illness, but they do not consent.
The law defines a mental disorder as an "abnormal state of mind" whether continuous or intermittent that is characterised by delusions or by disorders of mood, perception, volition or cognition.
This must be to such a degree that the person poses a serious danger to their own health or safety, or that of others, or if it seriously diminishes the capacity of the person to take care of himself or herself.By Hamish Fletcher @hamishfletcher Email Hamish