ING faces fury as offer divides investors
About half of the 200 or so investors gathered at the ING roadshow in Napier yesterday indicated they were ready to accept an offer from the fund manager to redeem their units in the group's two underwater CDO funds.
Tuesday, 16 June 2009
In a show of hands vote at the Napier War Memorial conference centre roughly 50% of the audience were in favour of postponing any deal with ING until after a Commerce Commission report into alleged mis-selling of the Diversified Yield Fund (DYF) and Regular Income Fund (RIF) was published.
However, Helen Troup, ING NZ chief, told the emotionally-charged group of Hawke's Bay DYF/RIF unitholders that the Commerce Commission report was "months if not years away".
"There's been a lot of misinformation about when the Commerce Commission report is due," Troup said.
Several investors expressed concern that they were being "blackmailed" into waiving their rights to further legal action if they accepted the offer but Troup told the audience the deal was made on normal "commercial terms".
In the fractious and sometimes noisy meeting, a number of disgruntled investors also complained about the "preferential treatment" afforded to those who invested in the DYF/RIF products through ANZ advisers.
Investors who bought the ING funds through the ANZ advisory network will have a limited amount of time to seek further redress through the Banking Ombudsman (BO) after the July 13 cut-off date for acceptance of the offer.
John Body, ANZ head of private banking and wealth, admitted that in some cases "the advice process broke down and people were not treated fairly". Body encouraged any aggrieved clients to write to ANZ outlining their case for further compensation on top of the ING offer.
He said the bank would pay out where a clear case of mis-selling was shown while clients unhappy with ANZ's decision could then appeal to the BO.
However, Body said while the bank was supporting all DYF/RIF unitholders by throwing in about $200 million into the ING settlement offer, it could not underwrite claims made against non-ANZ advisers.
"We can't stand behind all other advisers," he said. "We are not accountable for all advisers where a product they sold goes bad."
Troup also rebutted claims that ING should make up the difference for investors who bought the CDO funds through "her advisers".
"They're not my advisers," she told the audience. "Most independent advisers can't support claims against them so we have shouldered some responsibility. It's not as if we put our hands in the air and said it was all the advisers' fault."
Investors in the two frozen funds have until July 13 to accept either the cash-out now offer of 60 cents or 62 cents for the DYF and RIF respectively or sell their units at the same price while transferring funds into an ANZ cash account paying 8.3% interest for five years.
If investors fail to respond to the deal they will remain as unitholders in the two funds, which Troup said were "very, very unlikely" to recover to comparable levels as offered by ING now.
Troup said ING would also attempt to acknowledge receipt of all acceptances, contrary to its original investor communication, as some investors feared their reply documents could go missing condeming them to remain unitholders.
She also corrected the close-off date published in letters to some investors.
"It's Monday July 13 not Friday 13 as we said in some letters," Troup said.
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