Back
28 August 2017

Prince and Partners

Prince and Partners was trustee for finance company Viaduct Capital Limited, which went into receivership in 2010. We believed Prince and Partners failed to carry out its role as a supervisor with the care, diligence and skill expected. Prince and Partners admitted a series of failings in its role as trustee.

August 2017

In taking these proceedings, the FMA brought a case under Section 34 of the FMA Act for the first time. This is a significant power; in that it allows the FMA to ‘stand in the shoes’ of another person’s right to take action against a third party.

Hearing on 21st and judgment on 25th August approving the terms of settlement between the Financial Markets Authority and Prince & Partners Trustee Co Ltd. Civil proceedings brought by the FMA under Section 34 of the FMA Act were settled for $4.5 million.

18 August 2017

The parties reached a settlement and subsequently notified the Court. The scheduled five-week hearing was vacated.

20 August 2014

filed civil proceedings against Prince and Partners Trustee Company Limited (Prince), using the powers of section 34 of the Financial Markets Authority Act. Prince was the trustee for finance company Viaduct Capital Limited (Viaduct).

Viaduct collapsed in 2009. FMA alleges that Prince breached the obligations it owed to Viaduct investors and to the Treasury (the Crown) under the Retail Deposit Crown Guarantee.

Section 34 of the Financial Markets Authority Act enables the FMA to stand in the shoes of another and exercise that person’s right to take action against an individual or company who is or has been in the financial markets industry.

Exercising the right of action of Viaduct investors and the Treasury (who holds the rights of investors paid out under the Crown Guarantee), FMA alleges that Prince failed to fulfil its obligations to protect the interests of investors in Viaduct. The claim further alleges that this conduct resulted in loss to individual investors and to the Treasury under the Crown Guarantee, to which Viaduct was a party.

The FMA has serious concerns about the conduct of Prince as trustee in the case of Viaduct. The FMA has determined that it is appropriate for the Court to consider the conduct in this case, and where appropriate to award compensation to investors who suffered loss as a result of Prince’s failure to fulfil its obligations as Trustee. This is the first claim filed by FMA against a trustee.

“Trustees play a critical role in protecting the rights of investors and it is vital the public have confidence that a trustee’s obligations will be discharged,” said Belinda Moffat, FMA Director of Enforcement.

FMA has brought separate criminal charges against individuals associated with Viaduct which are currently still before the Court.

Related