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KPMG has been appointed as temporary administrator of the funds by the Financial Markets Authority (FMA), the first time that FMA has executed this power.
Fund Managers Otago (FMO) was removed from its role as administrator of the three mortgage trusts, two of which are already being liquidated, because it failed to improve its performance to a level that would satisfy its authorized supervisor, Trustees Executors Limited.
The remaining fund called the NZ Mortgage Income Trust (Fund # 2), with its 600 investors, will now also be liquidated.
Until yesterday none of its investors could withdraw their money.
“This ensures that all investors will be treated fairly and equitably,” said Matthew Band, general manager of corporate trustee services for Trustees Executors.
“KPMG Restructuring Services will contact investors to communicate their liquidation process for this fund.”
It is not known how much money is owed to investors.
After the Executing Trustees removed FMO as a fund manager, he was unable to find another licensed manager who wanted to fill the vacancy, and thus had to request that the FMA step in and appoint a new supervisor.
Two of the funds, the Capital Mortgage Income Trust and the NZ Mortgage Income Trust, were already in the liquidation process.
Band said his organization had worked closely with Otago fund managers to try to fix issues related to governance, compliance, solvency and regulatory violations.
“FMO has not been able to improve its performance to the standard that we expect from a licensed manager and what is required under the FMCA (Financial Market Conduct Act).”
He said that his organization was obligated to monitor the funds in the best interest of all investors.
“We believe these interests are best served by eliminating FMO and requesting FMA to appoint KPMG Restructuring Services as temporary manager.”
The FMA’s director of supervision, James Greig, said that the decision to remove the FMO showed that there were safeguards to be used if investors’ interests were threatened.
“Supervisors are the front line regulators for managed investment schemes and their supervision is designed to ensure that fund managers meet their obligations and take appropriate action when managers fail to meet those obligations,” he said.
– Are you an investor in Fund Managers Otago? Our reporter Jacob McSweeny would like to hear from you. [email protected]
