Almost two years after launching an investigation into the van Eyk group in New Zealand, the local corporate cop was just about to close its case last week. Then Australia’s ASIC lobbed a big writ on van Eyk’s former RE, Macquarie Bank. The wounds have suddenly been re-opened.
According to a spokesperson for New Zealand’s Financial Markets Authority (FMA), the regulator is “finalising the NZ investigation of van Eyk” that began in August 2014.
The news comes as ASIC launched a court case against Macquarie, the RE (responsible entity) that backed the van Eyk multi-management range of funds marketed under the Blueprint brand.
In a release last Thursday, ASIC detailed its case against Macquarie Investment Management Limited (MIML) to be heard in Supreme Court of New South Wales that will determine the penalty for previously admitted “contraventions of the Corporations Act”.
“The proceedings involve investments of A$30 million made by the VBI [van Eyk Blueprint International Shares] Fund in 2012 into a Cayman Islands based fund, known as Artefact Partners Global Opportunities Fund (Artefact),” the ASIC release says. “The VBI Fund was one of the Blueprint series of funds of which van Eyk Research Pty Limited (now in liquidation) was investment manager, and MIML was responsible entity.”
The statement says ASIC and MIML have agreed that the responsible entity: failed to “adequately” assess the initial VBI decision to make three investments in Artefact between July 6 and October 30, 2012; allowed members to illegally redeem units in the illiquid VBI fund over June to September 2013; and, failed to investigate van Eyk’s monitoring of the underlying Artefact investment between February 2013 and July 21 the following year.
Macquarie suspended redemptions in the VBI fund and three other affected Blueprint products on August 1, 2014, before shutting it down a fortnight later – triggering the wind-up of all the Blueprint funds (which measured about A$2 billion at the peak) and ultimately the once highly-respected van Eyk Research business.
In 2013 van Eyk broke into the NZ market with its purchase of the-then Pyne Gould Corporation (PGC) owned Perpetual Portfolio Management and Perpetual Asset Management. At the same time, the George Kerr-headed PGC sold down its almost 40 per cent stake in van Eyk to AWI, the ASX-listed company headed by Andrew Barnes, who subsequently founded NZ trustee roll-up Perpetual Guardian (beginning with buyout of Perpetual Trust from PGC).
Boutique advisory firm, Saturn Portfolio Management, bought out the remains of van Eyk NZ – including the roughly NZ$65 million Perpetual Portfolio Superannuation Fund – for about NZ$700,000 late in 2014. While at the time Perpetual boasted about 10 financial advisors, only four remain with Saturn, which is currently engaged in court action with one defector.
Most of the other players involved in the van Eyk saga – notably Kerr, former van Eyk chief, Mark Thomas, Artefact et al – also have legal cases pending in relation to the collapse. Barnes and Kerr are also involved in a separate legal battle regarding PGC’s sale of Perpetual.
Artefact, the London-based hedge fund at the centre of the original Blueprint product freeze, owned by interests linked with Kerr and headed by expat New Zealander, Richard Boon, has since repaid $20 million – although the firm is now in liquidation.
“MIML recently paid the remaining approximately A$10.9 million plus interest to unit holders (less fees and winding up costs) and expects to recover the majority of that amount from Artefact’s liquidator,” the ASIC release says.
The NSW Supreme Court is due to set a hearing date today (June 27) with both parties eager for an early start.
“The FMA will not be involved in the Australian action and although we do not see any direct consequences to NZ investors, we will still monitor the proceedings with interest,” the FMA spokesperson said.
- David Chaplin, Investment News NZ
NOTE: Investor Strategy News editor, Greg Bright, is a former non-executive director of Pyne Gould Corporation.