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Logic assists investor in recovering Credit Sails

Logic assists investor in recovering Credit Sails from Forsyth Barr

Wanaka, New Zealand – March 24, 2011 – Logic Fund Management has been actively campaigning for New Zealand regulatory bodies to open an investigation into the failed Credit Sails transaction since May 2010.

On Thursday, March 24, 2011, the NZX made a public announcement that Forsyth Barr broke NZX rules by not executing a client order and would be fined $5,000 as well as having to reimburse the client for an appropriate amount.

Logic Fund Management engaged the NZX on this issue when it was brought to their attention in July 2010. The client revealed documentation from 2008 where they had issued a written instruction to Forsyth Barr to convert their entire portfolio to cash “as soon as possible”.

In Logic’s investigation, all of the securities were converted apart from Credit Sails, which were strangely left behind. In an official complaint to the NZX, Logic sited this anomaly as well as the fact that a total of 2,450,000 Credit Sails notes worth approximately $1,405,349 NZD changed hands on the NZX between the date the investor had issued the order and the portfolio review over four months later. Due to the manager’s failure to act, the investor suffered a complete loss.

Forsyth Barr responded by arguing that a market for Credit Sails was inexistent at the time and the manager had attempted to protect the client’s investment at the time by not selling.

The NZX did not accept Forsyth Barr’s argument and released its decision, penalizing Forsyth Barr for their failure in executing a client order.

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“We are pleased to see the NZX performing its duty as a market regulator. With the recent change in the financial industry, we feel it is imperative for the NZX to lead the way in upholding transparency and fundamental principles especially in the case of failed financial products. We hope the NZX will take the opportunity to investigate further into Credit Sails as a whole,” said Logic Fund Management CEO, Greg Marshall.

ENDS

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