Commission sends warning to Ross Securities: letters risked breaching the Fair Trading Act
The Commission has warned Australian company Ross Securities Pty Limited that in its opinion, letters sent to holders of
BIL capital holders between February 2002 and March 2003 were misleading and deceptive, and at risk of breaching the
Fair Trading Act.
The letters related to an offer by Ross Securities, trading as Ross Investments, to buy BIL Finance Limited capital
notes and included the following representations:
"Ross Investments buys securities in companies and trusts which have had financial problems and/or have a limited
market. We also provide small holders with a facility to exit their investment economically. Hence, we are writing to
you with an offer to buy your Capital Notes in BIL Finance Ltd." ..."Our offer is 61.5 cents for each Capital Note."
Director of Fair Trading Deborah Battell said the Commission alleged the letters were misleading because there was no
evidence to suggest that BIL has not been able, or will not be able in the future, to meet its obligations to holders of
capital notes as they fall due. Nor was their evidence to suggest that it was difficult to sell capital notes on the
open market.
"In addition, the reference to providing small holders a facility to exit their investment economically was, in the
Commission's view, misleading. The offer in the letter of 61.5 cents, or 63.05 cents in certain cases, for each capital
note, was far less than the market price of between 86.1 and 100 cents per capital note at the time the offers were
made," she said.
The Commission has warned Ross Investments that it needs to ensure that any offer it makes to purchase debt securities
in the future does not give a misleading impression regarding the actual value of those debt securities.
"Investors should also be wary of such unsolicited offers, and make sure they obtain competent financial advice on its
merits," Ms Battell added.