BNZ freezes Access Brokerage's accounts

10.25am UPDATE

Bank of New Zealand has frozen all accounts held in the name of Access Brokerage, which was yesterday placed in liquidation after a client fund shortfall of around $5 million was discovered.

Access tended to be used by small investors who traded on the internet. Investors were given a BNZ account number to put money before they would buy the shares.

BNZ said in a statement this morning that all accounts in Access' name, including trust accounts, had been frozen.

The bank said the trust accounts operated in the same way as a solicitor's trust account.

"The clients' relationship is with Access Brokerage; only Access Brokerage can authorise the withdrawal or deposit of funds from the trust accounts that are in its name. By law, the bank can respond only to the instructions of Access as the trustee, its authorised nominee, or the liquidator. Bank of New Zealand does not operate the accounts in any way," the bank said.

Owen Gill, BNZ corporate communications manager said the bank hoped to receive instructions from the liquidator on arrangements for the frozen trust accounts in the next few days.

Mr Gill said Bank of New Zealand customers who had personal call accounts for the purposes of on-line share-trading were unaffected by the freezing of the trust accounts.

"It is only accounts that are in the name of Access Brokerage that are frozen; accounts that customers may have used for the purpose of personal on-line share-trading via the Bank of New Zealand website are not frozen and customers can access funds in those accounts," he said.

Liquidators Michael Stiassny and Brendon Gibson of Ferrier, Hodgson and Co were appointed yesterday following a 48 hour investigation by stock exchange operator NZX.

NZX chief executive Mark Weldon told Radio New Zealand today that Access' acting managing director and 91 per cent shareholder, Bill Garlick, contacted the exchange after the close of trade on Friday to advise there might be a problem.

Mr Garlick has been acting managing director for several weeks, filling in for fellow director Peter Marshall who was on sick leave.

An initial investigation by NZX over the weekend found that Access' client funds trust account did not have enough money in it to meet client obligations.

NZX member firms are required to sign monthly declarations as to the state of their client funds and are also subject to regular in-office audits by the NZX. Mr Weldon told Radio NZ today that Access had signed its declaration last month and was due for an audit next week.

"Unfortunately when you live in a society and there are laws and rules you have to make a choice at points in time whether you believe people's books and their signatures, or you are in there every day. It's a balancing act," Mr Weldon said.

As well as declaring Access in default, NZX has also referred the matter to the Minister of Commerce, the Securities Commission as well as the Serious Fraud Office.

- NZPA