Bankruptcy case may prompt stocktake

A case in which a former financial adviser’s clients are seeking to bankrupt him may force others in the industry to assess their structures, it has been suggested.

Thursday, March 19th 2015, 5:59AM

by Susan Edmunds

Andrew Hrothgar Robinson was the second authorised financial adviser to lose his licence when the FMA cancelled it in 2012, after David Ross.

Robinson had acted as an adviser to Neville Mace and Mace’s family trust.

A High Court judge said Mace made “six disastrous investments” worth $1.5 million based on Robinson’s advice.

Mace and the other trustees sued for damages. They said Robinson indicated he had made similar investments but did not tell them that was through convertible notes in lieu of a commission. They said they were not warned of the risks of their investments.

Robinson said his advice was in line with the investors’ aggressive risk profile. But he was last year ordered to pay damages of $1.59 million for misleading and deceptive conduct.

The trustees tried to serve bankruptcy proceedings on Robinson but did not have an address for him. The case was called in the High Court last week but put off until the end of the month.

Adviser Simon Hassan said the case could worry advisers and prompt some whose assets were not protected by trusts or in other ways to look for protection.

But he said this was an unusual case. “This particular adviser was operating well outside the bounds - not just of professional practice but also of the law. But if the facts were greyer, say where a lack of attention or a process failure lead to a finding against an AFA, it could well prove prudent for adviser to have protected his or her assets in a trust.”

The FMA said it would not be appropriate for it to comment on the case.

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