The Serious Fraud Office has begun an investigation into Wellington fund manager David Ross and his firm Ross Asset Management after court-appointed receivers found records for just $10.2 million of the $449.6 million he purportedly managed.

The SFO has been working with the Financial Markets Authority, which began its own investigation on Oct. 25 and has since obtained a freeze on Ross’s assets. John Fisk and David Bridgman of PricewaterhouseCoopers were appointed receivers and managers and have recommended all of the Ross-related entities be placed in liquidation.

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Ross Asset Management may have breached the Securities Act by misrepresenting to its clients the kind of services it was offering, allowing it to escape audits.

The Shareholders’ Association has called for a swift law change to ensure all companies taking money from the public are subject to strong oversight.

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Visitors to the fourteenth floor of Morrison Kent House in Central Wellington are greeted by possibly the least auspicious entrance to a boutique fund manager imaginable.

A simple plastic logo consisting of plastic letters Ross Asset Management is glued to a pale wooden veneer. One of the letters is broken.

But behind the locked doors lie the remnants of something much more damaged than the name plate, with growing fear that the office was the nerve centre of what could turn out to be New Zealand’s largest ever Ponzi scheme.

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An un-named investor in Ross Asset Management spoke on Radio New Zealand this morning about the company’s principal David Ross, the documents he presented which the investor’s accountant reckoned tallied up, and how plausible Ross appeared to be.

She spoke of her shock at the news that Ross’ activities appear to have been a Ponzi scheme, of double digit returns (although not in the last few years), and of how everything appeared to stack up.

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The receivers for Ross Asset Management have found just $10.2 million of investments, slightly more than 2% of the total of $449 million.

PwC receiver John Fisk says it is likely the historical returns advised to investors are exaggerated and may be fictitious.

In a progress report to the High Court, released today, receivers Mr Fisk and David Bridgman say RAM and its nine associated entities are insolvent and should be liquidated.

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Wellington firm Ross Asset Management may have taken management fees of $30 million since 2000, receivers say after pinpointing just $10 million of assets out of a purported $450 million.

Receiver John Fisk says the situation “looks pretty grim at the moment”.

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By Alex Tarrant

Returns reported for the supposed NZ$450 million Ross Asset Management ‘investment fund’ were likely exaggerated and possibly fictitious, while withdrawals by investors over the last five years appear to have been funded by contributions made by other investors, receivers PwC say, in language that hints at a Ponzi scheme.

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By Hamish Fletcher

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

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