Receivers of the embattled Ross Asset Management say the Wellington fund manager appears to have "characteristics of a Ponzi scheme".

In a report released today Ross Asset's receivers say they have identified just $10.2 million of the $449.6 million the Wellington fund manager was believed to be controlling on behalf of 900 investors.

Following complaints from investors, the Financial Markets Authority executed a search warrant on Ross Asset Management offices and the home of the company's director, David Ross.

The authority then obtained a freezing order of Ross' assets and those of associated entities on November 2.


Upon the FMA's request, receivers PricewaterhouseCoopers were then appointed to examine the companies' affairs.

In its first report on Ross Asset Management released today, PwC said that while records showed the fund manager purported to hold $449.6 million of investments spread across 1720 accounts, it could only identify $10.2 million of investments.

"I can't say definitively at this stage, we've only been in there a little over a week, but it certainly has characteristics of a Ponzi scheme in that investor's money was coming into the account and those funds were being used to pay other investors," said Fisk.

"We've only being able to confirm $10.2 million worth of shares, investments, that are in the name of the Ross Group companies, but the portfolio reports which were sent out to the investors, the most recent ones of those are the 30th of September quarter they add up to the $450 million in so-called value," said Fisk.

"When we actually look at the share price for the shares which are disclosed in the portfolio report they are generally accurate to what the shares are trading for at that date," he said.

Fisk said in some cases when the number of shares owned by investors was added up, the Ross Group would have been one of the top 20 shareholders of that company.

"But when we look at publicly available information about who the top 20 shareholders are of those companies Ross Group isn't there," he said.

In a statement issued by PwC earlier today, the receiver said there was "a significant gap in the identified market value of the group's investments as against the amounts reported in investors' portfolios."

"The analysis of the receivers and managers to date indicates it is likely the historical returns advised to investors are exaggerated and may possibly be fictitious. Therefore, the actual cash loss that may eventually be suffered by the remaining investors will differ from the amounts currently showing as the 'value' individual investors' portfolios," the statement said.

Fisk said the receivers believed the investment fund managed by Ross Group was "insolvent as it cannot repay the value of the portfolios reported to investors as they become due in the ordinary course of business,"

Fisk said PwC is recommending that the Ross Group entities be placed in liquidation "because this will help with the realisation of assets for the benefit of investors".

"We are fully aware the situation is distressing for investors and it is our aim to provide as much certainty as quickly as possible," said Fisk.

Financial Markets Authority chief executive Sean Hughes welcomed the greater clarity the report gave on Ross' affairs, but said it would makes for difficult reading for the 900 plus investors with funds under management.