The Financial Markets Authority said yesterday it had filed civil proceedings against Prince & Partners Trustee Co Ltd as trustee for collapsed finance company Viaduct Capital Ltd.
Viaduct & related company Mutual Finance Ltd went into receivership in 2010, Viaduct owing 110 deposit $7.8 million and Mutual owing 450 investors an estimated $17 million $9.3 million. The authority alleges Prince breached the obligations it owed Viaduct investors and Treasury under the retail deposit Crown guarantee.
It’s the first claim the FMA has filed against a trustee. The authority brought separate criminal charges in March against 5 directors or former directors of Viaduct & Mutual Finance Ltd, and another person who has sought name suppression.That action is still before the High Court.
One of those charged, former Viaduct director Nic Wevers, died in March and the charges against him were withdrawn. The others charged are Paul Bublitz, Bruce McKay, Richard Blackwood, Lance Morrison & the unnamed person. Mr Bublitz, Mr McKay & Mr Blackwood were directors of both companies and Mr Morrison of Mutual.
Financial Markets Authority enforcement director Belinda Moffat said yesterday section 34 of the Financial Markets Authority Act enabled the FMA to stand in the shoes of another, and exercise that person’s right to take action against an individual or company who is or has been in the financial markets industry.
Exercising the right of action of Viaduct investors & Treasury (which holds the rights of investors paid out under the Crown guarantee), the authority alleges Prince failed to fulfil its obligations to protect the interests of investors in Viaduct, and that this conduct resulted in loss to individual investors and to Treasury under the Crown guarantee, to which Viaduct was a party.
Attribution: FMA release.