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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: $20 million missing whilst Broker's client money used to cover losses

Posted by on in ROYAL COMMISSION URGENT
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$20 million missing: Broker's client money used to cover losses

Sydney Morning Herald March 13, 2019 7.40pm

Sarah Danckert

 

One of Australia's largest brokers, Halifax Investment Management, is set to head into liquidation after administrators discovered that some of the $210 million of client money was used to cover off losses on bad bets on investment products by other clients.

Investigations by administrators from Ferrier Hodgson have found that just under $20 million of customers' money is missing.

Ferrier Hodgson has likened the collapse of Halifax, which had 12,000 clients in Australia and New Zealand, to other high-profile stockbroker collapses in recent years including BBY, Sonray and Opes Prime.

Action against the company by the corporate regulator is a distinct possibility, with sources saying the Australian Securities and Investments Commission was taking a close interest in the outcome of the administration.

More than $190 million of client money remains frozen as the administrators seek court approval for distributing the money back to clients.

Given the "co-mingling" of client funds, this could see all customers of Halifax receiving less money than they had placed into their trading accounts, despite not being responsible for how their money was used by the company.

The missing money is equivalent to 9 per cent of the total customer funds held by Halifax ahead of its collapse. Halifax called in administrators just before Christmas, freezing customer funds.

Halifax's clients can still close out trades (i.e. sell shares in a particular entity, or close off a bet on the oil price falling, etc) but they are not able to recoup their funds.

Hallifax operated and offered three trading platforms - Interactive Brokers (IB), MetaTrader 4 (MT4) and the MetaTrader 5 (MT5) platforms. Interactive Brokers, which has a stockbroking licence, is a third party online trading platform that provides a white label product to Halifax.

The platforms allowed Halifax's clients to invest in a range of products and equities foreign exchange derivatives, equity derivatives and indexed contracts for difference.

Over the past three months, Ferrier Hodgson has reviewed more than 10,000 transactions.

"There appears to be extensive co-mingling of client monies," the administrators said on Wednesday.

"As a result, the funds invested by MT4 and MT5 investors may have been used to ‘top up’ the accounts of IB investors (and vice-versa). In simple terms, the monies of other investors may have been used to credit the IB platform.

"Our investigations indicate that while the IB platform may appear to be ‘whole’ in that it is fully funded, we have determined that investor funds may have been mixed or co-mingled in a way that affects the claims of all investors on all three platforms in both the Australian and New Zealand businesses."

Ferrier Hodgson said the only option for creditors now would be to place the company in liquidation after the administrators' attempts to salvage the company through a deed of company arrangement (DOCA).

"We have explored options for a potential DOCA at length, whereby investors agree to share the deficiency proportionally to expedite the distribution process," Ferrier Hodgson said.

"After careful legal consideration, it has been determined that a DOCA is not achievable," it added.

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