Prince and Partners Trustee company has admitted its failings as a trustee and settled civil proceedings for $4.5 million
Prince and Partners Trustee company has admitted its failings as a trustee and settled civil proceedings for $4.5 million, according to the Financial Markets Authority.
Prince was the trustee of Viaduct Capital Limited, a finance company that went into receivership in 2010.
The FMA brought the civil proceedings against Prince – the first time the regulator brought a case under section 34 of the Financial Markets Authority Act. The settlement has been approved by the High Court, a condition for proceedings brought using the rights of action of investors not covered by the retail deposit Crown guarantee and the New Zealand Treasury.
The basis of the case was that Prince failed to carry out its functions with the care, diligence and skill expected of a reasonably competent and prudent trustee, FMA said.
“The trustee’s role was to protect the interests of investors and Prince was supposed to act as an independent watchdog over Viaduct. It failed to do so, despite obvious concerns with the proposed acquisition of Viaduct, and the red flags raised by PwC and the withdrawal of the Crown Guarantee,” FMA’ head of enforcement Karen Chang said.
“Supervisors under the new regime have an important role to play in protecting investors and promoting confidence in New Zealand’s financial markets. By bringing this claim and receiving these admissions, we’ve highlighted the type of misconduct that is unacceptable from a licensed supervisor.”
According to the FMA, Prince admitted its failure to exercise the level of professional scepticism required in the proposed acquisition of Priority Finance (Viaduct’s former name) in 2009. Prince said it should have made a number of inquiries, in particular into the relationship between Nick Wevers, Paul Bublitz and Hunter Capital.
“It should also have taken independent legal and accounting advice on possible breaches of the Trust Deed. Prince accepts the acquisition transaction was not in the best interests of investors,” FMA said.
Related stories:
Financial advisers doing well but need to explain fees, says survey
Investor confidence has bounced back says FMA
Prince was the trustee of Viaduct Capital Limited, a finance company that went into receivership in 2010.
The FMA brought the civil proceedings against Prince – the first time the regulator brought a case under section 34 of the Financial Markets Authority Act. The settlement has been approved by the High Court, a condition for proceedings brought using the rights of action of investors not covered by the retail deposit Crown guarantee and the New Zealand Treasury.
The basis of the case was that Prince failed to carry out its functions with the care, diligence and skill expected of a reasonably competent and prudent trustee, FMA said.
“The trustee’s role was to protect the interests of investors and Prince was supposed to act as an independent watchdog over Viaduct. It failed to do so, despite obvious concerns with the proposed acquisition of Viaduct, and the red flags raised by PwC and the withdrawal of the Crown Guarantee,” FMA’ head of enforcement Karen Chang said.
“Supervisors under the new regime have an important role to play in protecting investors and promoting confidence in New Zealand’s financial markets. By bringing this claim and receiving these admissions, we’ve highlighted the type of misconduct that is unacceptable from a licensed supervisor.”
According to the FMA, Prince admitted its failure to exercise the level of professional scepticism required in the proposed acquisition of Priority Finance (Viaduct’s former name) in 2009. Prince said it should have made a number of inquiries, in particular into the relationship between Nick Wevers, Paul Bublitz and Hunter Capital.
“It should also have taken independent legal and accounting advice on possible breaches of the Trust Deed. Prince accepts the acquisition transaction was not in the best interests of investors,” FMA said.
Related stories:
Financial advisers doing well but need to explain fees, says survey
Investor confidence has bounced back says FMA
