FMA slams Ross allegations

Sean Hughes, outgoing head of the Financial Markets Authority. Photo / Mark Mitchell

Suggestions the Financial Markets Authority knew about David Ross long before his business was raided were "crap", the regulator's chief executive told a conference this morning.

"Let me very clear about this because there have been some assertions and some whispering campaigns that everybody knew about Ross and that we were too slow to act. I'm standing here before you today to say that it took one phone call, one, for us to take action. Any suggestion that we knew about Ross beforehand is crap," FMA head Sean Hughes said at the 2013 Forensic Conference in Auckland today.

Wellington's Ross Asset Management was raided by the Financial Markets Authority last year after complaints from an investor attempting to get money out. The High Court then froze the business' assets as well as those of its founder, David Ross, and appointed receivers to manage the firm's affairs.

Although Ross' 900 clients believed their investments were worth almost $450 million, receivers from PwC could identify only about $11 million in his group of companies.

PwC's John Fisk also said last year that they had found "characteristics of a Ponzi scheme" at Ross Asset Management and the FMA and Serious Fraud Office are both investigating Ross and his company.

While the FMA expected market participants to put customers interest first, Hughes said this morning that the authority also expected investors to take responsibility for their own financial decisions.

"This is not, ladies and gentleman, a nanny state and one where we can stand behind the shoulders of every investor to guide them to what is prudent for them," Hughes said.

"And I have to say in the sad case of Ross Asset Management many investors were too trusting with their money. They relied on word of mouth recommendations but did little else.. now that's all very easy for me to stand here and say what they should and shouldn't have done and we know that financial markets can be confusing to the unintiated, but Ross does remind us of the need for investors to do their homework and to become more actively involved in their investments," he said.

"At the end of the day responsibility starts and ends at home - not with Government, not with regulators, not with legislators. You have to take responsibilities for your own financial well-being," Hughes said.

The Forensic Conference, organised by the New Zealand Institute of Chartered Accountants and the New Zealand Chapter of the Association of Certified Fraud Examiners, continues today.