Wellington’s David Ross, at the centre of the collapse of a suspected Ponzi scheme involving about $450 million, has been stripped of his membership of the Institute of Chartered Accountants (ICA), for now.
Under an “interim suspension”, David Robert Gilmour Ross lost his institute membership after a hearing held in secret in the middle of last month. The suspension was announced by the ICA disciplinary tribunal yesterday.
Financial Markets Authority (FMA) staff raided Ross’ offices on The Terrace late last year after investors complained they could not get their money.
Receivers have been able to locate only about $11m of the almost $450m some 900 investors believed was being managed on their behalf by Ross Asset Management Ltd (RAM) [Co. No 455971. Formerly called Quill Investments Ltd].
Last month the first disciplinary action was taken against Ross, with the FMA suspending his licence as an authorised financial adviser for six months as it continues to investigate possible Securities Act breaches.
After the FMA action, the ICA said matters identified by RAM’s receivers warranted a complaint to the professional conduct committee from the institute’s chief executive, which led to the interim suspension.
Ultimately, the institute’s disciplinary tribunal has the power to strike off Ross as a chartered accountant.
Bruce Tichbon, spokesman for the Ross Asset Management Investors Group, said they had expected the suspension.
Tichbon said knowing Ross was a chartered accountant had given him confidence in Ross.
“It gave him an aura of professional respectability,” he said.
Tichbon said other members of the investor group had asked him to pursue whether Ross’ status as an accountant required auditing by the institute.
“I have been informed there were certain burdens on the accounting professional bodies to test the veracity of his services and therefore there was likely to be some grounds for claim there,” Tichbon said, though he had not confirmed that.
The institute carries out a regular review of accountants who hold a certificate of public practice, but it would not comment directly on Ross’ professional conduct. Only members of the institute can call themselves chartered accountants, which means they have certain qualifications and experience.
Meanwhile, Tichbon said regulations relating to apparent Ponzi schemes seemed to be “virtually non-existent”.
“The lack of legal clarity is a serious and cruel issue,” he said, because there was no case law for apparent Ponzi schemes.
Hundreds of investors were left totally up in the air. There were no clear guidelines on how the case should be managed – for example, whether money could be clawed back from some investors who had earlier taken money out. Earlier reports from the receivers showed that since 2000 just over $303m had been invested through the firm, while $29.8m was taken out in fees, and investors withdrew $289m.
“People are really suffering terribly,” Tichbon said, with some investors suffering from depression.
“Instead of a [regulatory] ambulance at the bottom of the cliff, there is a cesspit of broken glass and alligators.”
Report by James Weir, Fairfax NZ News. 17/01/13
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2. Report by Jonathan Underhill, National Business Review. 04/12/12
3. Report by Hamish Rutherford, Fairfax NZ News. 17/12/12