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Bank Makes a Mockery of ASIC Enforceable Undertaking

Discussion in 'Business, Investment and Economics' started by Keighery, Oct 16, 2017.

  1. Keighery

    Keighery

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    In 2005 I had my first dealings with shares. My wife and I purchased a Geared Equity Loan with Macquarie Equity Limited (MEL).

    In August 2014 my wife and I received an email from MEL regarding any former clients concerns they may have about advice provided to them at any time whilst they were a client.

    I made a submission to MEL in 2014 and I have been embroiled in the process ever since, which has uncovered some very questionable practices by MEL which their current senior employees have gone to great lengths to cover up.

    ASIC Chairman Greg Medcraft said: “ASIC is about ensuring investors can be confident and informed and central to this is ensuring financial services are provided efficiently, honestly and fairly.”

    There was nothing honest or fair about MEL’s previous practices which were recently exposed, and there definitely has not been anything honest or fair about the way MEL has treated the ASIC Enforceable Undertaking.

    On the 4 September 2015 we made a submission to the Financial Ombudsman Service (FOS). On the 21 October 2016 FOS made a determination. A short time later FOS posted on its website our determination. In fact it was our FOS case manager’s recommendation he prepared for the panel to assess.

    I asked my former accountant (who attended a meeting with MEL senior employees where he was asked to make a number of statements relating to our case) to view the FOS website, the following is part of his letter sent to FOS CEO of which my former accountant never received a response;

    “After reading the document in particular the sections which referred to my statements as the applicant's Accountant I was shocked and disturbed to see a number of statements that were attributed to me had been falsified to support Macquarie Bank’s case. These statements in no way represented the truth or the content from the statements I provided.

    I myself have never had any personal dealings with the Financial Ombudsman Services. I did observe while on the website it stated "About us - what we do; The Financial Ombudsman Service provides accessible fair and independent dispute resolution for consumers and financial services providers".

    There was nothing fair or independent about the determination document I read on the Financial Ombudsman Services Website the material I supplied was altered or misquoted to benefit the financial services provider. I am shocked that an independent and fair organisation like the Financial Ombudsman Services would allow the content of information provided by an independent professional to be altered and misstated which I have witnessed.”

    MEL presented a number of evidence documents to support their position during the FOS process. The cover pages of a number of those documents stated the document contained our option details, the problem was all option details had been deleted. Despite numerous requests for MEL to release our option details MEL were never forthcoming in releasing them, until I asked an unrelated question and to my surprise to answer that question MEL came back with a spreadsheet which contained our option details.

    The option details completely disproved all of MEL’s arguments in our first case and presented me with evidence for a multi-million dollar claim that involves MEL concealing and keeping all profits from options purchased and sold against our shares. MEL’s evidence documents support us receiving all profits from option transactions which included;

    • MEL would be the middle man in the option transactions it neither directly gained nor lost from the option transactions – its position was neutral the objective being to implement the clients request.

    • Macquarie purchased a put option in the market place to support the feature, and the cost of the put option incurred by Macquarie became part of the interest rate charged to the applicant for the GEI loan.
    On 29 May 2017 the MEL representative that sold us the GEI loan product, referring to above hand wrote and signed the following; “this is a time reflection of what I told Mr & Mrs …… in 2005 about the GEI loan product. This was based on the information forwarded to me by Macquarie Bank. At the time I was a financial adviser employed by Macquarie Bank”.

    Originally we had 2 separate claims with FOS. FOS on the 16 March 2016 stated they were not able to deal with our other claim as it had not been reviewed through MEL’s remediation program and at this time MEL has not waived the FOS jurisdictional monetary and time limits which MEL had to do as part of the ASIC Enforceable Undertaking. MEL subsequently reviewed the claim and FOS is in the process of assessing it.

    In May 2017 I asked FOS if they could assess our new option claims in conjunction with the claim that was in progress, that’s if MEL would waiver the FOS jurisdictional monetary and time limits. As a result of my request MEL came back to FOS claiming that our 2005 option claim had already been dealt with by FOS in our previous case, this led to a Jurisdictional Decision by FOS that defies belief.

    FOS ombudsman made a Jurisdictional Decision on the 7 July 2017 below is from that decision;

    “The panel considered the 2005 option claim in dispute 413119. The ombudsman who chaired the panel has confirmed the panel was aware of these allegations and the determination covered those concerns. The determination clearly, if implicitly, rejects both those claims: • The panel concluded that the information supplied did not demonstrate a loss to the applicants.”

    The 2005 option claim was several times larger than our share upside claim which was the subject of the dispute, therefor one would assume a larger percentage of the 19 page determination would be dedicated to the 2005 option claim if in fact it was dealt with by the panel as MEL suggested.

    The FOS ombudsman in reviewing the 19 page determination could only find one short paragraph which was the one MEL presented to FOS. The FOS ombudsman based her Jurisdictional decision on the following;

    “ In respect of the claim the FSP and/or lender should have remitted its profits to the applicants, the panel said ‘FOS’s role is to compensate applicants for their loss, not to divest profits or penalise financial services providers. As such, it is not appropriate to consider the divestment of the FSP’s profits.’ “

    Believe it or not, the above paragraph is the only reference the ombudsman could find to substantiate the Jurisdictional decision that it was dealt with and clearly rejected in the panels determination document. Below was my answer to the above paragraph which was ignored; I refer to the document I sent to FOS on the 16/05/2016; Requested Information Case number ….. “By calculating our loan margin MEL made $480,000, add $64,000, for brokerage gives FSP a profit of $544,000.”

    Above were the figures I submitted of the profits made from our loan facilities. I never asked FOS to consider the divestment of MEL’s profits, and it had absolutely no connection to the 2005 option claim.

    I reviewed the panel’s determination which had a number of headings with pages of supporting material to see if the 2005 option claim was mentioned or addressed in any way. I did not find one paragraph which stated 2005 option claim, and not one paragraph that addressed it in any way. On the other hand shared upside which the determination was all about was mentioned 66 times on the pages as it was being addressed.

    How option scam works

    The FSPs representative was given instructions to pass on to us the applicant, which included paperwork which indicated the basis for the interest rate we were going to be charged;

    Cost of funds – 5.7%

    Loan margin - 1.5%

    Option cost - 5.45%

    Total 12.65%

    The agreement included a put option allowing us to require MEL as at the maturity date to purchase shares which had fallen in value at the price we paid for them.

    We agreed to the rate of interest on the basis of a representation by MEL that the option cost component was required to compensate MEL for the cost to MEL of purchasing put options in the market to protect it against the possibility of the shares falling in value with us then exercising the put option.

    The financial adviser engaged by MEL and appointed to assist us, the Applicant, has confirmed that it was represented by him to us the Applicant that the bank would as part of the overall agreement purchase put options in the market. In fact:

    No put options were purchased by MEL;

    MEL actually sold put options and received $1,881,189 for the sale;

    MEL also purchased call options for $67,671. The profit on them was $1,751,458;

    Was the above option details mentioned or covered in the panes Determination, the answer is no. Was the option scam a one off or are there a lot more victims out there?

    I now feel that FOS was complicit with Macquarie Bank and Macquarie Bank has a much larger grip on the FOS process than just being able to alter witness statements to support its position.

    I recently wrote to the NSW Police Fraud Squad who told me they didn’t have jurisdiction in this matter. They were very helpful by sending a letter to ASIC with my supporting documents. ASIC are now looking into my allegations.
     
    Reggie1404 likes this.
  2. mjim

    mjim

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    Correct me if I am wrong
    - GEI simply works like this
    1) You borrow 100% to purchase shares, +
    2) you pay for an ATM PUT which is purchased from the open market ( The counterpart could be anybody including the broker's own trading arm) SO the OPTION is a ETO on ASX not an OTC thus completely transparent just like any other option transaction
    3) You remain the beneficial owner of the shares until expiry of the PUT and are entitled to all divideneds ( shares will be held by the broker so you can't run away with them)
    4) You pay % interest on the loan upfront
    5) The loan is non recourse becasue it is 100% protected at expiry you cna just walk away , the lender will get his money back by exercising the option
    6) You are allowed to sell Covered calls at a strike equal or above original purchas eprice
    7) Max risk to you = (Interest paid +PUT cots paid ) - Dividends and any premium from soled calls!
    If the above is true then what did Macquarie NOT DO?

    Could you please be specific and short
     
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