gunning for asic , page-6

This is a good call for reason, Plumbob.
So as not to get tongues wagging in wrong directions,
I again re-post (at no extra charge) ASIC letter in full.
And even throw in my comments in brackets, as can not bold here,
for extra blood circulation.
Copies of this letter and comments went to Lisa ALLEN of Australian and Michael WEST of SMH for action upon his return to desk on 6 May.
Hope this settles the unwarranted commotions.
====================================================
Our reference: 11-20063 (ASCTEC ID 54228/11)

ASIC 17 April2013
Australian Securities & Investments Commission

Mr Simon Grundel
P.O Box 61
Coffs Harbour NSW 2450

CONFIDENTIAL

Level24, 120 Collins Street Melbourne VIC 3000
GPO Box 9827 Melbourne VIC 3001

Telephone: (03) 9280 3200
Facsimile: (03) 9280 3444
ASIC website: www.asic.gov.au

Dear Mr Grundel

Re: Investigation into Wellington Capital Limited

I refer to your letter of 20 March 2013 to Tim Walker of the Australian Securities and Investments Commission (ASIC) and to your previous communications with ASIC.

The purpose of this letter is to inform you of the outcome of ASIC's investigation into suspected misconduct by Wellington Capital Limited (Wellington) and/or its officers in its capacity as the Responsible Entity (RE) for the Premium Income Fund (PIF).

Other than the ARL transaction appeal, ASIC has concluded its investigation and on the basis of the information obtained to date, has decided to take no further action. The reasons are set out below.

ASIC's approach to enforcement

In deciding what matters to pursue and what enforcement action to take, if any, ASIC considers a range of factors. Prior to commencing proceedings there needs to be sufficient evidence to prove allegations of misconduct in a form that is admissible in court. Further information regarding ASIC's approach to enforcement is contained in Information Sheet 151, which was provided to you in our letter dated 9 January 2013.

Alleged conduct

On 17 January 2012, after receiving a number of reports of misconduct, ASIC commenced an investigation into suspected misconduct by Wellington and/or its officers, including:

• the circumstances surrounding the June 2011 EGM of PIF unitholders;

• the valuation of PIF scheme property and whether it complied with the PIF compliance plan and financial services laws; and

• the transfer of PIF assets to Asset Resolution Ltd (ARL) in September 2012 and whether it was lawful.

The June 2011-PIF EGM

In May 2011, the PIF Action Group (PIFAG) petitioned an EGM of unitholders seeking to remove Wellington as its RE. The EGM was initially scheduled for 16 June 2011 but was later adjourned to 23 June 2011 (the EGM).

ASIC received information alleging that Wellington and/or its officers took active steps in the lead up to the EGM to avoid being removed by transferring PIF units to non-members to attend the EGM to vote in Wellington's favour. It was alleged that this conduct was in contravention of their duties under the Corporations Act 2001.

Specifically, it was alleged that prior to the EGM, a group of actors were hired as "stand ins and seat fillers", given units in PIF, "pink proxy forms", and asked to raise the proxy forms-to vote in favour of the CEO of Wellington Ms Jennifer Hutson (Ms Hutson) chairing the meeting.

ASIC's investigation revealed that PIF units were given to approximately 200 non-members (the Non-members) about two days prior to the EGM by way of deeds of gift executed by a third party. The Non-members were hired through a talent agency by another third party entity and paid to attend the EGM.

None of the third parties involved in this arrangement were officers of Wellington.

To determine whether or not Wellington and/or its officers were involved in transferring PIF units to, and hiring the Non-members to attend the EGM, ASIC:

• undertook interviews of witnesses;

• issued statutory notices for the production of books on various parties.

The combined voting power of the 200 Non-members (who were given 1,000 units each) at 200,000 units, would not have had impact on the pool of approximately 755 million possible votes.
[[ ASIC knowingly disregarded the fact that only few PIF members without proxies for others could attend the meeting and 200 “extras” would tip the balance ]]

ASIC's investigation found no evidence of Wellington and/or its officers being involved in procuring the transfer of PIF units to the Non-members, hiring the Non-members, or paying the Non-members to attend the EGM, therefore there was no basis for any action.
[[ 1. ASIC did not pursue enquiry as to who may have done these actions; had they, they would discover Craig Wallace responsible for these actions. 2. Craig Wallace was a Wellington Director included in early Wellington Capital updates as Responsible Entity for PIF. C. Wallace aka Yuan Essentials was also behind NSX share manipulation, which triggered NSX Price Query. 3. Jennifer Hutson lied to NSX enquiry by not disclosing her close affiliation to C.Wallace.]]

PIF scheme property valuations

ASIC's review of PIF's June 2011 financial statements initially gave rise to concerns that Wellingt n may have failed to ensure that scheme property was valued at "regular intervals appropriate to the nature of the property" and independently valued every three years in accordance with PIF's compliance plan.

ASIC proceeded to investigate these concerns. Following the June 2011 valuations, and after being informed of ASIC's concerns, Wellington organised for independent valuations, where necessary, to be obtained.

In June 2012, Wellington issued media releases on the National Stock Exchange and confirmed that independent valuers had been retained to value all assets over which the fund held first mortgage security. It also confirmed changes to the PIF Compliance Plan to reflect a mote prescriptive approach to valuations and a commitment to reporting on at least a 6 monthly basis.

ASIC's intervention was instrumental in ensuring that independent valuations were obtained and amended processes were implemented. An unqualified audit report was released to the market on 5 September 2012 and therefore no further action was required.
[[ Helidon Mines asset was offloaded for $300,000 while realistic valuation of the time put this asset in excess of $3,000,000.
Smells of Ian McDonald book-keeping waft on here ]]

The ARL Transaction

This is a separate matter arising from the transfer of PIF assets worth $90.75 million to ARL in September 2012. ASIC was concerned that Wellington did not put the proposed transfer of assets to a meeting of unitholders in the Fund. ASIC's view was that Wellington was
required to do this in order to have power to make the transfer, accordingly ASIC commenced proceedings in the Federal Court of Australia. The court found that the
constitution of the Fund provided Wellington with the power to make the transfer without the need for a meeting of unitholders to consider the transaction.

ASIC appealed the decision and the appeal has been set down for hearing on 17 May 2013.
[[ This will be a DUD Appeal in view of Wellington NSX release 021726925 of 19 April 2013 on Conditional sale of assets to Asset Resolution Limited ]]
Apart from the ARL matter and subject to any additional material coming to its attention,
ASIC intends to take no further action in respect of this matter.

While ASIC has determined on the basis of its investigation not to take any further action, the Corporations Act provides for investors to take their own civil action to seek redress if they believe that a contravention has occurred. Should you wish to consider taking such action, I would encourage you to seek independent legal advice.
[[ So ASIC role is to direct all approaches for Regulation and Supervision to independent legal advice providers? ]]

Yours faithfully,
(signature)
TimMullaly
Senior Executive Leader, Financial Services Enforcement Australian Securities & Investments Commission