Access had used client funds for "some time": Liquidator

By NZPA

Thursday 16th September 2004

A liquidators' report into the collapse of discount broker Access Brokerage shows the firm had been using client funds to run the company for some time, leading to a shortfall of $4.8 million in its client trust account.

Liquidator Brendon Gibson said in a statement today there were no proper processes in place for Access to withdraw client funds for commission and expenses.

Gibson said outstanding client obligations totalled $9.141 million, which was due to about 500 clients. "Taking into account the assets which appear to be related to client obligations, the shortfall will be in the region of $4.8 million."

He said this would be partially covered by asset sales, and estimated a total loss to all of the company's creditors and claimants of about $3.7 million before liquidation costs.

But Access' clients look unlikely to be left out of pocket, as the Bank of New Zealand (BNZ) and New Zealand Exchange (NZX) both stepped up to the plate today.

BNZ announced this afternoon it would underwrite the shortfall on Access' trust account.

BNZ managing director Peter Thodey said it was apparent many of Access' clients thought they had put money into personal BNZ accounts rather than a trust account run by Access.

"Our investigations over the last 10 days, and correspondence we have received directly from Access clients, shows that this was the impression Access clients were given by Access Brokerage," Thodey said in a statement. "Under these circumstances, the bank has acted decisively for the benefit of the Access clients. Hence my decision to underwrite the shortfall in the trust account."

Interest will accrue on deposits in the trust account and it will be paid as part of the disbursement of the account.

Thodey said the bank was likely to pursue legal remedies against parties involved in the Access collapse.

Meanwhile, NZX also announced today it would dip into the $460,000 in its Fidelity Guarantee Fund, to covering any remaining shortfall for Access' clients.

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