(This replaces ‘What illiquidity issues? asked the guy from RL360)
(Intro by Lindell Lucy – at www.rapeofhongkong.com)
The LM Emails (#10): When Asked If LM Gave Special Treatment to Bond Investors, Martin Venier Dodged the Question
In February 2013, Martyn Terpilowski asked Royal London 360° why they were still allowing LM’s Managed Performance Fund (MPF) on their platform even though the fund had no liquidity. He pointed out that his own client had been waiting for well over two years to get his money back.
RL360° responded that they were not aware of any liquidity issues. LM always paid them back on time.
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| Peter Drake of LM has closed his ‘I am innocent’ website |
Martyn was stunned. He’d never heard of anyone getting their money back quickly. If RL360° was telling the truth, it indicated that bond investors were being allowed to jump the queue ahead of direct investors like his client.
Martyn sent an email to LM sales manager Martin Venier to find out what was really happening. He asked Venier:
“are [bond] clients not waiting for their redemption money in the same way as [my client]?…Please advise as I thought all investors had to be treated equally.”
Venier’s response appears to have been a kind of half-truth, or maybe a quarter-truth, or maybe just a lie. Only the bond providers would know for sure.
Instead of answering whether LM was prioritizing bond investors (they clearly were), he implied that bond providers were bypassing LM and making fast-track redemption payments via their own ponzi-like transactions. He said LM had nothing to do with it.
Venier concluded by saying, “Hope the above adds clarity.”
Venier’s answer was most likely pulled out of thin air. If not, then bond providers have some explaining to do. The type of artificial liquidity which Venier described would have concealed MPF’s real liquidity problems, raising questions about whether bond providers knew what was really happening beneath the surface.
Conversation with Royal London 360°
From: Martyn Terpilowski
Sent: 25 February 2013 23:46
To: RL360 Investment Accounts; RL360 Dealing
Cc: ’Servicing Centre’; [RL360 Employee]
Subject: FW: [XXXXXXXX]
My question is – how come you accept LM at all? It is totally illiquid (whatever they say). Brandeaux has a 6mth tie up and you will not accept? I do not understand. Please let me know.
Cheers
Royal London 360°
From: RL360 Asset Review [AssetReview@rl360.com]
Sent: Tuesday, February 26, 2013 7:39 PM
To: Martyn Terpilowski
Subject: RE: [XXXXXXXX]
Dear Martyn,
My colleagues have forwarded your e-mail and comment in respect of asset acceptability.
Thank you for your comments, however, this isn’t our experience of either of the funds you’ve mentioned, but we appreciate your feedback.
Kind regards
[RL360 Employee]
Royal London 360°
www.rl360.com
From: Martyn Terpilowski
Sent: 27 February 2013 02:41
To: RL360 Asset Review
Cc: [RL360 Employee]; ‘Servicing Centre’
Subject: RE: [XXXXXXXX]
Hi
I was told by [two RL360 employees] that you do not take Brandeaux as liquidity is 6 mths + (that is a fact).
There is a 2 year waiting list on getting money out of LM (fact).
So why do u accept LM and why do u not accept Brandeaux or do u?
Please advise.
Martyn
From: RL360 Asset Review [AssetReview@rl360.com]
Sent: Wednesday, February 27, 2013 5:50 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]; Servicing Centre
Subject: RE: [XXXXXXXX]
Dear Martyn,
Which LM fund are you referring to?
Kind regards
[RL360 Employee]
From: Martyn Terpilowski
Sent: 27 February 2013 17:55
To: ’RL360 Asset Review’
Cc: [RL360 Employee]; ‘Servicing Centre’
Subject: RE: [XXXXXXXX]
All LM funds are gated – whatever they say – I have clients waiting over 2 yrs for the money back from the MPF.
What about Brandeaux? 6mths liquidity? Do u accept it?
Martyn
From: [RL360 Employee]
Sent: Wednesday, February 27, 2013 6:28 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]; [RL360 Employee]
Subject: FW: [XXXXXXXX]
Hi Martyn
[An RL360 Employee] has asked me to respond to you as I am responsible for the area that accepts or rejects assets on our products.
LM as you say do have significant redemption queues on some of their funds however, the funds that we have on our platforms that are open for new investments are paying redemptions in accordance with their funds T & C’s and the parameters we have agreed with them. Where any fund continually fails to adhere to its own terms we remove it from our platforms.
Brandeaux has a standard 6 month liquidity period which exceeds our company set limit of 5 months. However, Brandeaux also have a lot of discretionary powers in their documentation which allows them to continually defer redemptions until such time as they feel it is in the best interests of the fund to pay them. It is this ability to defer (albeit completely legal) which creates difficulties for us and as such we do not accept any funds which have similar provisions.
Regards
[RL360 Employee]
Royal London 360°
www.rl360.com
From: Martyn Terpilowski
Sent: Thursday, February 28, 2013 1:26 AM
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]
[RL360 Employee]
I think that fund is MPF – it is illiquid whatever they say. They use semantics so they can get on platforms, but has anyone ever redeemed? I bet not. I 100% gtee that fund is effectively ‘gated’. If not, please confirm it is MPF and that you have redeemed. As far as I know everything they have has queues and they lie about it. I can gtee that.
Brandeaux are actually honest and I like that far more.
Rgds
Martyn
From: Martyn Terpilowski
Sent: 28 February 2013 01:35
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]
Please confirm this as if you have actually redeemed money from MPF I need to know. I am sure you have not, but await your confirmation.
Cheers
Martyn
From: [RL360 Emloyee]
Sent: Friday, March 01, 2013 5:52 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]
Hi Martyn
The LM MPF has quite a few different classes and we have had no adverse experiences of this fund. All redemptions are paid to us in accordance with the respective asset classes T & C.
I’m not sure where we are going with this, are you asking us to change our view on Brandeaux and accept it?
Regards
[RL360 Employee]
From: Martyn Terpilowski
Sent: 02 March 2013 02:55
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]
No not at all – I am just telling you LM lie and it is not liquid and under the legislation governing the fund, they should not be making special agreements with bond providers so that your clients have benefits that my direct clients do not. My clients were told there were no issues with liquidity but 2 yrs on are still waiting for their money back. That is my only point. Not to get Brandeaux in – but just be careful with LM – they may tick your boxes, but is it the truth? They are a dangerous organization and only used by brokers for commission – do some research, they have all kinds of issues.
Rgds
Martyn
From: [RL360 Employee]
Sent: Monday, March 04, 2013 7:12 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]
Hi Martyn
Thanks for the note. We do keep a very close eye on all things LM related and have regular meetings/call with them to ensure that any issues that we hear about do not impact on our clients. The whole Trilogy take over issue has been quite detrimental to them and we are not seeing too many brokers using their funds these days.
Regards
[RL360 Employee]
From: Martyn Terpilowski
Sent: 05 March 2013 09:02
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]
Well in my experience talking to their Directors is a waste of time as they are liars and not fit to be running a company. You would have thought after the absolute mess up with Trilogy that no platform or broker would touch them, but that is not my experience as they seem to be raising loads for MPF still – paying 9% in soft commissions – they paid 3% when it was going well…. Shocking.
Rgds
Martyn
From: Martyn Terpilowski
Sent: Saturday, 2 March 2013 11:49 AM
To: Martin Venier
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)
Hi Martin
Can I just confirm something – with MPF that you have in portfolio bonds – are those clients not waiting for their redemption money in the same way as [my client]? i.e. are they being advantaged by not holding direct?
Please advise as I thought all investors had to be treated equally.
Rgds
Martyn
From: Martin Venier
Sent: Monday, March 04, 2013 10:58 AM
To: ’Martyn Terpilowski’
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)
Dear Martyn,
Please see the attached Information Memorandum, which describes the different unit classes, including direct and those for portfolio bond holders.
The investors in a portfolio bond is the bond itself.
There are a whole lot of end investors in our fund that we do not know, as the only way we can find out about the end investor is when an advisor notifies us for the receipt of commission.
Bond portfolio net balances grow over time, and it would include the bond making redemptions and adding money.
For example, if there a net increase in investments from a bond by $1 million, it might be made up of $2 million of inflows and $1 million in redemptions, but since there is legally one client involved, the bond itself, they can do whatever they like with the fund and make the redemptions.
Hope that makes sense.
Kind regards,
Martin
Regional Manager International | Treasury
T +852 2501 0262 | D +61 2 8268 0100 | M +852 9226 0708 | F +852 2530 1076 | E mvenier@lmaustralia.com | Skype: mvenier.lminvestment
A 16/F Aon China Building 29 Queens Road Central, Central, Hong Kong S.A.R. | P 16/F Aon China Building 29 Queens Road, Central, Hong Kong S.A.R.
www.LMaustralia.com
LM provides a global pathway to Australian investment solutions, and holds under management Australian assets with a gross realisation value in excess of A$3 billion. LM receives new business inflows from a licensed intermediary network spanning more than 75 countries, serviced by 130 LM people across nine global offices. The LM Funds are authorised by the financial regulators of Australia, New Zealand, Luxembourg and Singapore, with further approvals imminent in the jurisdictions of the USA, Canada, the United Kingdom and Pan-European UCITS. Options include cash; savings; conservative, enhanced and retirement income – debt securities and cash; Luxembourg domiciled SICAV-SIF; Australian equities – protected income and capital protected growth.
Martyn Terpilowski
From: Martyn Terpilowski
Sent: Monday, 4 March 2013 10:11 AM
To: Martin Venier
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)
Mmm – I see.. I guess there is always a way to get new money in, whilst not paying clients their money back… As long as the broker gets the commission and u get on the platforms all is good – except for the ppl who have been waiting for their money back for nearly 3 yrs. Brandeaux can’t get on platforms anymore as are honest about 6 mths liquidity…But they don’t pay com, so far less pressure from brokers to put on the platform. Just shows this industry really is a joke.
Have a good day.
Martyn
From: Martin Venier [mvenier@lmaustralia.com]
Sent: Monday, March 04, 2013 2:15 PM
To: ’Martyn Terpilowski’
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)
Dear Martyn,
I am not sure if you have a further question, but it is fairly simple, the bond is an individual investor, and in that regard it is no different to any investor pulling out a sum of money from MPF, that’s smaller than the amount they put in. A husband might put 50,000 in MPF, half is his wife’s and half is his. His wife wants her money back in 6 months, while he wants to add an additional 50,000. He simply pays his wife 25,000, and 25,000 to MPF – all we see is a net increase. In effect, that’s what happens with the bonds. We would not know about the 25,000 redemption to the wife, as the investment is in the husband’s name, but in the case of the bonds, advisors notify us to collect commission, but it makes no difference to us as long as the net balance increases. The situation does not hold for direct business, as it is made up of a huge amount of smaller balances, with different owners.
Hope the above adds clarity.
Have a good week.
Kind regards, Martin
Martin Venier
Regional Manager International | Treasury
T +852 2501 0262 | D +61 2 8268 0100 | M +852 9226 0708 | F +852 2530 1076 | E mvenier@lmaustralia.com | Skype: mvenier.lminvestment
A 16/F Aon China Building 29 Queens Road Central, Central, Hong Kong S.A.R. | P 16/F Aon China Building 29 Queens Road, Central, Hong Kong S.A.R.
www.LMaustralia.com
LM provides a global pathway to Australian investment solutions, and holds under management Australian assets with a gross realisation value in excess of A$3 billion. LM receives new business inflows from a licensed intermediary network spanning more than 75 countries, serviced by 130 LM people across nine global offices. The LM Funds are authorised by the financial regulators of Australia, New Zealand, Luxembourg and Singapore, with further approvals imminent in the jurisdictions of the USA, Canada, the United Kingdom and Pan-European UCITS. Options include cash; savings; conservative, enhanced and retirement income – debt securities and cash; Luxembourg domiciled SICAV-SIF; Australian equities – protected income and capital protected growth.
From: Martyn Terpilowski
Sent: 04 March 2013 14:17
To: ’Martin Venier’
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)
I understand, just think it is a little strange. Anyway – Have a good day.
MT
