PIS defends spruiking claims
Written on the 5 June 2009
A BUNDALL-based financial planning company will defend claims that it has spruiked clients after it was found to be charging commissions of up to 10 per cent for each dollar raised.
Professional Investment Services is being sued by the Australian Securities and Investments Commission (ASIC) for allegedly making ‘misleading and deceptive representations’ in recommending that clients invest in the failed Westpoint.
PIS, which last financial year paid out $17 million to 42 clients stung by the Westpoint collapse, is also a Great Southern strategic partner. Great Southern, the forestry giant that produced wood, pulp, cattle and wine grapes, has gone into administration owing 43,000 investors up to $4 billion.
PIS managing director Grahame Evans, has told the online Investor Daily that the possibility of an enforceable undertaking (EU), as a result of its involvement in the collapse of Westpoint, has not been ruled out. ASIC has not confirmed the EU.
PIS also reportedly raised capital for the now failed Timbercorp, the nation’s second biggest agribusiness scheme behind Great Southern. Timbercorp collapsed under a mountain of debt late last month after raising more than $2 billion from 18,500 investors.
PIS chief executive Robbie Bennetts, says the trend has been to lambaste the financial adviser in a volatile arena when companies collapse. Bennetts released figures to Gold Coast Business News that show from the six months to December 2008, the PIS investment portfolio recorded a decrease of 14.95 per cent.
This compares to a 22 per cent drop in the average share market portfolio and a 33 per cent decline in the market overall.
“The value of advice is very important,” he says.
“We look at the big numbers and you need to be in the market for the long-term, but no-one has a crystal ball to time what is going to happen.”
PIS and ASIC will return to court on August 19.
Meanwhile, a May survey by Merrill Lynch on fund managers has found that seven out of 10 are forecasting an improvement in economic conditions in the next 12 months.
Investors remain most excited about the prospects for China, where a net 61 per cent of respondents see the economy improving, compared with November’s survey, when a net 87 per cent expected it to weaken.