Ross pleads guilty
Wellington financial adviser David Ross has pleaded guilty in the Wellington District Court to charges laid by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA) and remanded in custody.
Thursday, August 29th 2013, 10:51AM 
7 Comments
A joint agency investigation between SFO and FMA into Ross Asset Management (RAM), and related entities, led the SFO to charge Ross on June 13.
The charges were four counts of false accounting and one count of theft by person in special relationship.
Then FMA charged Ross with one count of providing a financial service when he was not registered for that service, one count of knowingly making a false or misleading declaration or representation to FMA for the purposes of obtaining authorisation to become an AFA, and one count of supplying information or producing documents to FMA which he knew to be false or misleading.
The investigation into RAM and its related entities commenced in October last year when FMA received complaints from investors who had been unable to withdraw funds. FMA took immediate action to preserve investors’ funds by obtaining asset preservation orders and appointing receivers and managers to RAM and its related entities. A joint investigation with SFO subsequently commenced.
The SFO charges alleged that Ross conducted a Ponzi scheme which he disguised by falsely reporting clients’ investments. Large portions of client portfolios shown as invested through a broker "Bevis Marks" were fictitious and never existed, resulting in an overstatement of investment positions by more than $380 million.
More than 1,200 RAM client accounts have been affected by Ross’ scheme.
SFO acting chief executive Simon McArley said: “While a guilty plea does not address the significant losses incurred by a large number of victims, it will bring some relief to those victims. SFO and FMA have worked well together, applying their respective specialist skills in order to progress the investigation quickly and enable this timely outcome.”
FMA Head of Enforcement, Belinda Moffat said: “The financial adviser regime relies on advisers providing truthful information when they apply for any licence and Ross’ conduct has seriously undermined the integrity of that regime. We are committed to restoring investor confidence and will continue to respond immediately to investor complaints against market participants.”
Ross has been remanded in custody to reappear on 24 October to set a sentencing date.
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Comments from our readers
The perception that the FMA is somehow responsible, is, as you say, inappropriate.
However, they sometimes don't help themselves by apparently exceeding their remit in attempting to re-write and re-interpret the Code of Practice and ignoring the legislative/regulatory framework laid down.
I understood the FMA were, among other duties, the body entrusted with supervising adherence to the Code of Conduct by those subject to the Code provisions. Setting the standards contained in the Code was - again please correct me if I'm wrong - the responsibility of the Code Committee.
So if they seem to extend their authority over matters apparently beyond their remit, it's understandable that some might choose to allocate blame - however incorrect this may be.
The Code Committee gave accountants this exemption and also gave lots of other groups with chequered histories the same exemption.
That's where the blame lies and that's what needs to be fixed, amongst lots of other things.
We need to replace some members of the Code Committee with people with some knowledge of best practice.
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