an opes read just published in theage

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    Read this from the Age and then question again .."Where were the independent directors?"




    The Age now.
    Riqueza key to Opes probe



    Investigators offered further clues on the causes behind stockbroker Opes Prime's $1 billion implosion today in a creditors meeting in Melbourne.

    John Lindholm from corporate recovery specialist Ferrier Hodgson named British Virgin Island holding company Riqueza as a "linchpin" in investigations of the collapsed stockbroking company.

    Riqueza, headed by a single Singapore-based director, bore the brunt of the margin calls that in turn helped bring down Opes Prime, in a spectacular market meltdown that exposed 1200 clients to losses.

    Mr Lindholm said Ferrier Hodgson has been in touch with the director of Riqueza, who has been co-operating with the receiver's investigation.

    "A number of transactions were done through Riqueza and related entities," said Mr Lindholm. "One of the effects of those transactions were that margin calls weren't made when they should have been made."

    Ferrier Hodgson, which is acting as administrator of the Opes case, aims to take control of Riqueza at the director level and then decide after continued investigations whether they want to liquidate it.

    Opes creditors to get 30%

    This was little consolation for the creditors of Opes, who learned at the meeting that they would receive 30 cents in the dollar as a result of the money that the administrators hope to recover from the financial wreckage of the company.

    The estimated amount means that its share trading clients could lose as much as $340 million from the collapse.

    Ferriers said the likely recovery was based on current knowledge of the brokers' finances and could be achieved through action against Opes' ''problem clients'' and a linked company, which between them owe the group $229 million.

    Other steps include powers available to a liquidator to recover property or compensation from individuals who may allegedly have been involved in the collapse, albeit that Ferriers did not name any likely targets of such action in its first report to Opes' creditors.

    Creditors should also receive a payout from any surplus generated from the sale of shares in dozens of ASX-listed companies that were seized by Opes' three main lenders, ANZ, Merrill Lynch and Dresdner Kleinwort as security for the money lent to the broker.

    It emerged yesterday that the three financial institutions took stock worth almost $1.6 billion as collateral over their loans - significantly higher than was first thought. ANZ's share of the stock pool was $919 million, Merrill Lynch $603 million and Dresdner Kleinwort $67 million.

    Ferriers said in its report that the total sum - amounting to $1.589 billion - reflected to a theoretical ''mark to market'' value not what was expected to be realised from the current sale of the stock now being pushed through by the three banks.

    Merrill Lynch is understood to have completed its sell-down and will return a surplus to Opes' receivers although Ferriers did not provide an exact amount in its report.

    ''Information regarding current collateral balancies and monies due to financiers is considered market sensitive,'' the Opes clients were told at the first of the creditors' meetings in Melbourne today.

    The sale of the shares are considered to be the key asset for the creditors. In all, the firm's clients are owed $514 million while, in turn, a number of them owe Opes $24 million.

    ANZ Bank, which also extended a cash lifeline to the company before it called in administrators on March 27, has a charge of at least $95 million against the company, according to the Ferriers' document.

    Opes collapsed after ''irregulaties'' were discovered in certain trading accounts. It subsequently emerged that its clients did not own the shares they thought were theirs given the collateral deals Opes' had with its bankers.

    Furious investors

    One excitable investor, Melanie Mitsios, upon leaving the meeting, said ''let the games begin'', in an apparent reference to a protracted struggle to recoup losses.

    Her husband, Nick Mitsios, said he was ''very disappointed'' with the results of the meeting.
    One distraught investor who said he lost $1 million in the stockbroker's collapse said he was upset at ASX for allowing it to happening.

    "They (the ASX) fell down on the job." The investor, who didn't want to be named, said "For Australia, it's humiliating. It shouldn't have happened."

    Another creditor from Sydney, representing a listed company, said "Questions will be asked about the level of inaction by ASIC and ASX but what anyone will do about remains to be seen." The creditor, who also asked not to be named, said there is a level of answering ASX and ASIC will have do when the dust settles. But he wasn't sure whether either regulator would take any blame in the end.'

    And as I posted earlier Where were the independent directors and the regulators. Smells like a fox on guard at the chook shed!!!
    Posted: 30/03/08 23:44 Sentiment: None From: 58.105.xxx.xxx
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    This is what he (an independent director) said in Nov. 2006
    "Mr Gillooly said that Opes Prime had an exciting business model. "Opes Prime successfully identified a growing niche in the securities lending market for smaller players. They will soon bring their creative flair and flexibility to other niche areas such as structured products.

    "Opes Prime has invested strongly in their management team and technology and I look forward to assisting their expansion into other specialist areas", Mr Gillooly said."
    Source Company News Release.

    Took him a while to wake up and judge the characters around him. I have no exposure to Opes but was recommended to invest.
    But took a big steer away! Luck or good judgement? not sure. As many of those exposed must be thinking. I find it hard to blame investors for the incompetency (and maybe more) of Company Directors and "expert" advisors."


    How close to a rat do you have to be before you smell it? Shonky in the extreme!


 
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