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Watchdog mulls Credit Sails action

June 18, 2012

Watchdog mulls Credit Sails action


The Commerce Commission has written to investors who lost millions in defunct Credit Sails notes asking if they wish to take part in any legal action to recover money.

The notes were marketed to investors in May 2006 offering interest of at least 8.5 per cent with capital protection, but the complex structure failed in 2008 with losses of virtually 100 per cent.

The public invested $91.5 million in the 2006 note issue, but selected investors were offered a chance to exit in 2007 through a $25m buyback facility from Credit Sails arranger Calyon, a subsidiary of giant French bank Credit Agricole.

The commission has been pursuing an investigation of Credit Sails under the Fair Trading Act, which prohibits misleading and deceptive conduct, including the making of false or misleading representations.

The investigation is at an advanced stage and the commission has given its views in writing to parties involved in the offer. A response is due early next month.

The offer was promoted by Calyon, now known as Credit Agricole Corporate and Investment Bank, and lead managed and underwritten by sharebroker Forsyth Barr, which hasn’t yet responded to calls.

The commission said legal action would require it to identify investors who had suffered loss, so it was inviting them to provide information in support of a legal claim.

Investor Grant Waterhouse, who had $150,000 in Credit Sails through Forsyth Barr, said he intended to participate in any legal action.

“You can only hope [for some money back],” he said. “Even if the result is less than optimal at least someone is doing something about it.

“I started this battle with the stock exchange three years ago and they wouldn’t do anything about it. The Commerce Commission has at least taken investor concerns seriously so all power to them. Our job now is to support them and see what comes of it.

“Whether we get all our money and some of our money back, I have to believe one of those two options is the likely outcome.”

– © Fairfax NZ News

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