Update on the Commerce Commission's investigation into Credit Sails
24 April 2012
The Commerce Commission's investigation into the failure of the Credit Sails investment product has reached a point where the Commission is now able to update investors and the public.
Since 2010 the Commission has been investigating the failure of Credit Sails. The product was marketed and sold to the public in 2006 with the prospect of 8.5% interest income and capital protection. $91.5 million was raised through the offer. The notes are now virtually worthless.
The Commission's investigation has been conducted under the Fair Trading Act 1986 and has included liaison with the Financial Markets Authority. The Commission's investigation has advanced to the stage that it is now communicating its views to the parties who were involved with the investment offer.
The Commission is awaiting their response, which is due early July. The Commission's ability to take action in this matter is not in jeopardy from any imminent limitation deadline, due to an arrangement it has reached with the parties involved with the offer. Statements in some media that the Commission is poised to announce compensation payments to investors are not accurate.
The Commission is also aware of a letter to Credit Sails investors asking them to join in funding legal action to recover investor losses. The Commission does not have a view on whether investors should subscribe to that joint effort, but does recommend that any investor contemplating joining in legal action should consult their own lawyer to ensure that they have a full understanding of what is involved.
The Commission's investigation is limited to the Fair Trading Act. The Commission cannot bring other kinds of claims in this case. Investors should be aware that the Commission's action is limited in this way.
The Commission expects to provide a further public update in July or August 2012. There will be no further public comment until that time.