Commerce Commission closes out successful Credit SaILS investigation

The Commerce Commission has welcomed the news that all but $17,000 of the $60 million settlement fund in the failed investment product Credit SaILS has been returned to investors.

The Public Trust, who was appointed as Trustee to distribute the settlement fund to eligible investors, has successfully contacted 2,217 of the 2,218 investors and has repaid $59,982,800. Only one investor (an Australian resident) was not found, despite efforts to locate them.

Credit SaILS were sophisticated debt securities marketed and sold to the New Zealand public in 2006 with the prospect of 8.5% interest income and capital protection. $91.5 million was raised through the offer. Credit SaILS failed in 2008 and the notes were virtually worthless on maturity.

The Commission reached a settlement with five companies involved in the failed investment product in December 2012. The companies were Forsyth Barr Limited, Forsyth Barr Group Limited, Credit Agricole Corporate and Investment Bank, Credit Sail Limited and Calyon Hong Kong Limited. The Commission alleged that the parties had engaged in misleading and deceptive conduct when marketing the products, and that this breached the Fair Trading Act. The companies did not agree with the Commission, and deny that they have breached the Act. However, as part of the settlement, the companies agreed to create a settlement fund of $60 million to be distributed to investors who lost money.

Commerce Commission Chairman Dr Mark Berry said that completion of the payment process is a fantastic outcome for the investors.

“Most of the investors in this fund were elderly and it was important for the Commission to settle this in the most advantageous way for these people. Hopefully, having the money returned to them will have a big impact on the quality of their lives.”

”The Commission ensured that eligible investors who bought Credit SaILS notes with the prospect of interest income and capital protection were reimbursed around $870 for every $1000 they lost when the investment product failed. Without the settlement reached by the Commission investors may have only received $20 for every $1000 invested,” said Dr Berry.

“I would like to thank the Public Trust for their work over the past few months, and for successfully finalising the repayment process so close to Christmas.”