The Financial Markets Authority (FMA) has appointed a temporary manager to manage three schemes previously operated by Fund Managers Otago Limited (FMO).
Yesterday, the FMA appointed KPMG Restructuring Services NZ Limited as temporary manager after the schemes’ supervisor, Trustees Executors Limited, determined it was in the best interests of investors to remove FMO as manager of those schemes. The removal was initiated due to issues relating to FMO’s governance, solvency of the manager and regulatory breaches.
Trustees Executors was responsible, on behalf of investors, for supervising FMO’s performance as manager.
James Greig, FMA Director of Supervision, said Trustees Executors’ decision to remove FMO demonstrated that safeguards in the FMC Act – intended to protect the best interests of investors – could be used when necessary.
“Supervisors are the frontline regulators for managed investment schemes and their oversight is designed to ensure fund managers meet their obligations, and take appropriate action when managers do not meet those obligations,” he said.
Because the schemes no longer have a manager and Trustees Executors was unable to find another licensed manager willing to fill the vacancy, Trustees Executors requested that the FMA exercise its power to appoint KPMG Restructuring Services as the temporary manager.
This is the first time the FMA has used its power to appoint a temporary manager.
Of the three schemes, two are legacy schemes that have been closed for several years and are in the process of being wound up: Capital Mortgage Income Trust and the NZ Mortgage Income Trust.
The third scheme, the NZ Mortgage Income Trust (No 2) Fund, has approximately 600 investors. This fund was open, but the removal of FMO as manager also means that this fund will now be wound up.
KPMG Restructuring Services’ role is to ensure that all investors in the FMO funds are treated fairly and equitably while the funds are wound up and returned to investors.
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