News Round Up

Sue directors not advisers; Would you like capital protection with that fund?; Outlook for emerging markets positive; Sharebroker merger rumoured.

Tuesday, June 2nd 2009, 7:33AM

Investors in failed finance companies should look first to sue the directors of fraudulent finance companies when seeking damages, not the financial advisers who relied on supposedly credible prospectuses to base their recommendations, according to one legal expert.

Hundreds of investors are seeking legal reparation for financial losses incurred as a result of investments based on advice given by financial advisers. However Brian Henry, barrister and Chairman of funds management firm Goldman Henry Capital Management says investors would more likely receive compensation if they targeted Directors instead of the financial advisers who are not currently covered by their insurers. Directors have their own indemnity insurance which is better placed to compensate investors if courts determine that the directors have been negligent.

Henry says the trend in legal circles to sue investment advisers is of significant concern and is likely to yield little satisfaction for investors. One of the issues driving this dissatisfaction is the extent of insurance coverage financial advisers have with their indemnifiers. [Read more here]

Would you like capital protection with that fund?
Liontamer has launched its newest fund which comes in two forms: with or without capital protection.

The fund, Australia Series 1, accesses the top 200 companies on the Australian sharemarket. Liontamer believes that the Australian economy could provide a strong recovery story.

The fund's fully protected units have a six year term, while the unprotected ones have a five year term.

Positive outlook for emerging markets
Rating agency Standard and Poor's says, in a just-released report, that the outlook for emerging markets is good.

It says there are positive economic factors underpinning the emerging markets and the crisis this time is different from previous events.

This time the contagion has been transmitted from the developed economies in a complete reversal from previous crises which had their roots in the structural problems of the same emerging economies.

"An important conclusion from our review is that fund managers see compelling value in the sector. S&P's analysis of values in emerging markets, which measures valuations on "normalised" trend earnings, also supports this belief. The initial effect of the financial crisis on emerging-market economies, through the reduction of exports, and via banking channels, will be sharp; however, fund managers are arguing strongly that this sector should recover before developed markets," S&P Fund Services analyst Leanne Fook said.

Sharebroker merger rumoured
Speculation is mounting that Goldman Sachs JBWere and Macquarie Financial Services are in talks over merging their retail sharebroking businesses.

John Rowley finishes as head of Macquarie this week, and it's understood that GSJBW managing director John Cobb will oversee any combined business of the two broking houses.

Speculation is divided over which company will pick up the other's retail share, but one source said JBWere's distribution has been very profitable for the broker.

JBWere's earnings value fell 14.5% for the 12 months ended April 30 from the previous year, while Macquarie's value tumbled 62% as Macquarie increased the volume of its sales by more than 12,000 trades. JBWere had the second highest number of sell trades among share brokers, even as it cut the number by around 1,600 over the same period.

Goldman Sachs Group merged its Sydney-based business with the 160-year-old JBWere in 2003, giving the American investment bank a local brokerage arm in Australia.

« Budget 2009: AXA Budget Commentary 2009

Sovereign takes regulation bull by the horns »

Special Offers