Koala, for my part, I think City has an obligation to indemnify the FMF for all of the FMF's losses by way of it's consolidation of the FMF.
How is City able to effect a de-consolidation on which investors relied without disclosing the true nature of the fund when withdrawing the old PDS and issuing a new PDS? Don't you think it unfair if City knows that the fund is in trouble, and it doesn't tell investors (unit holders and share holders)? It's City failure to disclose the true nature of the FMF that leads me to believe that the deconsolidation is not effective in law.
I think that in the future, s. 52 TPA, s. 601FC (and others) Corporations Act, and 'deconsolidation' are three issues that will haunt a lot of the main players in this saga. It's only a matter of time.
Some bright spark (or sparks) will line them all up and 'shoot' one 'legal bullet' through the lot of them.
Just think if such an action was possible, where it would leave share holders?
Again, as at December 2007 - $93.5m negative unit holder investment , $50m impairments, slowing market, foreseeable extra $160m defaulters for February 2008, and an extra foreseeable $240m defaulters for March 2008 - and $61.15m net investors leaving the fund up 1 January 2008 to 3 March 2008 (pro-rata at $20m/month). (the defaulters for February and March 2008 were not disclosed until 13 October 2008).
None of this was a surprise to City, but it was to me.
I invested and re-invested money with the FMF between 1 September 2007 and 3 March 2008.
City was RE for the FIF (First Income Fund) and the FMF - City knew in December 2007 that the FMF was on the rocks, but it did nothing to protect the FIF's investment either.
I somehow feel that if City froze the fund on 1 September 2007 that most of our money would be safe today, or at least our 'risk' would have been reasonable. Maybe the share price would have some legs in it too.
CIY Price at posting:
4.3¢ Sentiment: None Disclosure: Not Held
