Appearing in the Court of Appeal, Justin Smith QC argued his client sought name suppression owing to his concerns about undue media attention and public scrutiny of his investment.
A Ross Asset Management investor, who was able to withdraw $954,000 from RAM's Ponzi-style scheme before it collapsed, is fighting to keep name suppression ahead of a High Court decision on whether liquidators can claw back funds for unpaid investors.
Appearing in the Court of Appeal before Justices Rhys Harrison, Forrest Miller and Mark Cooper, Justin Smith QC argued his client sought name suppression owing to his concerns about undue media attention and public scrutiny of his investment, while other investors who had also withdrawn money still had suppression. In March, Justice Alan Mackenzie in the Wellington High Court heard the investor withdrew $954,000 from the RAM group in 2011, having originally invested $500,000 in November 2007, using a bank loan.
The RAM liquidator, PwC's John Fisk, is seeking to claw back some of the $100-115 million lost in the fraudulent scheme, for some 1200 investors. Justice Mackenzie's decision in the first such test case, which seeks to claw back up to $3.8 million that was withdrawn from the scheme, has been delayed as the investor fights to keep permanent name suppression.
Wellington-based Ross built up a private investment service by word of mouth, producing regular reports for shareholders indicating healthy but fictitious returns. Between June 2000 and September 2012, Ross reported false profits of $351 million from fictitious securities trading as part of a fraud that was the largest single such crime committed by an individual in New Zealand.
Mr Smith said Ross "was pilloried in the press" and his client could fairly expect similar attention. The investor was also at a "vulnerable" stage in his career and had been "dragged in willy-nilly, kicking and screaming" to the test case, while other investors who had withdrawn money retained anonymity.
Justice Harrison said the investor should understand that media attention was one of the "slings and arrows of life" and that news stories become "fish and chip paper tomorrow."
Jenny Stevens, appearing for Mr Fisk, said greater disclosure allows other investors to understand the circumstances of Justice Mackenzie's decision. Mr Stevens argued there is a large group of unpaid investors who think it is "some cover-up" or conspiracy, which were live issues for the liquidator, and name suppression would add to that feeling. Mr Smith argued name suppression would allow details to be included in Justice Mackenzie's decision, without being too heavily redacted.
PwC's Fisk argued in the High Court in March that because a Ponzi scheme relies on new investors putting money in to repay earlier investors and prolonging the fraud, any repayment made belongs to the collective group of defrauded investors.
As at June 16 last year, the liquidator estimated the realisable value of shares held by Ross Asset Management entities to be about $5.4 million, with estimated total realisations available for investors and creditors of $3.98 million. RAM's assets were frozen and receivers appointed in 2012 by the Financial Markets Authority after the watchdog received complaints about delayed or non-payment of investor funds.
Two other clawback test cases will be heard together in September. A decision on permanent name suppression has been reserved.
(BusinessDesk)
