Call for FMA to do more to aid investors in Kloogh firms

Barry Kloogh
Barry Kloogh
The Financial Markets Authority should do more to help people caught up in the multimillion-dollar collapse of Dunedin financial adviser Barry Kloogh's companies, lawyers acting for a group of affected investors say.

At least 170 people have been affected by two firms of which Mr Kloogh was sole director - Financial Planning Ltd and Impact Enterprises Ltd - being placed in liquidation.

The firms are estimated to owe between $12million and $14million with little possibility of the money being recovered.

Authorised financial advisers are regulated by the Financial Markets Authority, which recently revoked Mr Kloogh's authorisation.

Wilkinson Rodgers lawyer Geoff Mirkin, who has convened a group of lawyers acting pro bono for a coalition of affected people, said the FMA could and should do more to help investors in the failed companies.

"We need to understand, on behalf of the investor group, what happened," Mr Mirkin said.

"Is it fair for the investors to bear the costs of finding out what happened, or is that something that the FMA should be covering?"

Many investors, who believed their funds were secure across a spread of investments, had now lost everything, Mr Mirkin said.

The official assignee was handling the liquidation of the two companies and had been very helpful, Mr Mirkin said.

"They have a team of three people on it and have been putting a lot of time and effort into it, and have special funding they can draw on and use, and will go as far as they can to try and sort things out, but they are not the FMA, and they don't have the power of the FMA."

Mr Kloogh is being investigated by the Serious Fraud Office.

No charge has been laid.

Mr Mirkin said the authority could not and should not interfere with the SFO's work, but it could still do much on behalf of investors.

"We believe the FMA has huge powers and resources to do what needs to be done in this case."

An FMA spokesman said its first step to help investors had been initiated by its instigating the process to place the companies into liquidation.

"We acknowledge this is a difficult time for investors," he said

"Where possible, we have communicated directly with investors on the steps the FMA has taken.

"Now that the official assignee has been appointed, they have carriage over the investigation into the affairs of the companies.

"It is through the process of the liquidation that any relevant information can be provided to investors."

The spokesman said the FMA had worked with the SFO at the initial stage of the investigation, and had since referred all matters to the SFO as the primary agency.

"Given the appropriate and relevant agencies are investigating these matters, there is no further action we can take at this stage," he said.

The first liquidators report, issued a fortnight ago, said the two companies operated as a Ponzi scheme controlled by Mr Kloogh.

Comments

Another failure of the capitalist model. Murky.

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