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More than 45 investors who received advice from financial advisory firm Vestar are preparing to take legal action against the firm in a bid to claim back millions lost or tied up in troubled finance companies.
Vestar is currently owned by the financially troubled ASX-listed group Octaviar but
its business is being transferred to Christchurch investment company Gould Wealth Management in a deal expected to be signed off this week.
Gould plans to take on most of the financial advisers already under the Vestar group including former director Kelvin Syms who originally sold the business to Octaviar in 2006.
But a group of investors say they want to sue their former financial advisers, the directors and its investment committee for giving them poor advice and ploughing millions of dollars into finance companies which have since gone into receivership or moratorium.
The investors have fronted up with $500 each to hire lawyer Laurence Herzog who is in the process of preparing a case.
One retired Auckland couple backing the law suit who had between them around $3 million invested through Vestar say they are devastated at the likely loss of almost half of their retirement savings.
The couple, who do not wish to be named, say they first sought advice in the early 1990s from a financial adviser who later joined Northplan before Octaviar bought the business in 2006 and changed the name to Vestar.
Their original adviser left the business four years ago and was replaced but two years ago they noticed a big change.
The couple say they were asked to sign a power of attorney style agreement giving Vestar the ability to move their investments without their permission.
"We were one of the last ones to sign it. We didn't want them to do things without our authority. But we were told the beauty of the agreement was that Vestar would get wholesale access to investments that may not be there for more than 24 hours and if they could not get hold of us they would be able to step in on our behalf."
The couple say they signed the agreement but gave strict instructions for no more than 5 per cent of their investment to be placed with any one company.
They were shocked to find after coming back from holiday in January that $50,000 of their money had been transferred to OPI Pacific Finance increasing the percentage in one of their family trusts to over 17 per cent.
In another trust more than 18 per cent had been invested with Pacific Finance and MFS Boston Finance. Both are owned by Octaviar and have since gone into moratorium.
"We are retired. We have no way of getting that money back. All we could say was 'oh s***'."
The couple say around half of their money is invested in fixed interest investments which are now 75 per cent impaired because the money was invested with six finance companies - Bridgecorp, Capital + Merchant, OPI Pacific Finance, MFS Boston, St Laurence and Property Finance. The only one not in receivership or moratorium is Property Finance which traded its way out of a receivership in February.
And it appears they are not alone. At a meeting held two weeks ago by EUFA (Exposing unacceptable financial activities) many investors discovered their fixed interest portfolios were all in the same six finance companies.
"We call it the magic six," says another investor from the Waikato who does not wish to be named.
The group is holding meetings in Whangarei and Kerikeri on July 23 for Vestar investors to attend. They have also set up a blog site www.vov.co.nz for investors to share their views.
A spokesperson for OPI NZ, which manages Vestar on behalf of Octaviar, said as no documents had been served the directors did not wish to comment.
SAME SIX
* Investors say they were asked to sign agreements giving Vestar the right to change their investments without consent.
* Six troubled finance companies were part of a recommended portfolio including Bridgecorp, Capital + Merchant, OPI Pacific Finance, MFS Boston Finance, St Laurence and Property Finance.