By Nick Stride
Friday 5th September 2003
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Edinburgh is one of three funds management groups that have so far come to light as breaching the terms of Securities Act notices exempting them from issuing a prospectus before selling funds in the local market.
BT Funds Management and Sagitta Wealth Management are in the same boat and a Securities Commission exercise questioning all 65 overseas noticeholders has netted an undisclosed number of other managers.
Edinburgh said one factor in its calculations was the question of whether any repayments it had to make to New Zealand investors who subscribed for "invalid" units should be in New Zealand dollars or in sterling.
The manager said there were reasonable arguments for repayment in sterling.
But it had been advised there was a "material likelihood" a New Zealand court would require repayment to be made in dollars to investors who made their subscription payments in the local currency.
It noted its exposure level could alter with changes in the levels of equity markets and the exchange rate.
The $4.6 million figure arises from the legal requirement for delinquent issuers to pay investors 10% annual interest on the amount of their subscription from the time it was made.
Edinburgh has issued £16.7 million ($45.6 million) of units that may be considered to have been issued invalidly.
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