Those who directed monies toward Basis Capital in the days before its initial warning of trouble to investors will need to invoke their right to a ‘14 day free look’ to get monies returned, according to one retail investor.
The investor, whose self-managed super fund had directed in excess of $100,000 toward the Basis Yield Alpha Fund just before June 30, said his financial planner received no satisfactory communication from Basis or its registrar, and he eventually wrote the registrar a letter (copying in ASIC) mentioning the ’14 day free look’ rule which applies to new retail investors in any managed fund. After a six week wait, the money was eventually returned to his account last Wednesday. Up until June 2007, Basis Capital had provided an updated unit price for its Australian-domiciled funds on or around the 20th of each month. Monies directed toward the funds in the previous month would be held in a trust account managed by Registries Limited, its registrar, only being converted into a Basis fund holding after a new unit price was struck. While this process had been completed for inflows directed toward Basis before the May 2007 revaluation date, subsequent investors were left in limbo when the manager issued its warning about redemption freezes on July 11. It emerged then that Basis had not struck unit prices during June, and would not be for the foreseeable future until the full extent of the meltdown was known. This left the millions received since late May (the busiest period for super inflows) waiting in the Registries account. Subsequently, all investments made during July were returned within a few days of the fund’s initial warning. The investor, an industry participant who did not wish to be named, suspected that unless retail investors in the pool of June investors were proactive like he had been, their money would eventually be converted into units – at a unit price which would be depressed, and vulnerable to further erosion as a back-up of redemptions were processed. It is understood no decision has been made with regard to investments via platforms in June, as they do not have the legal benefit of the 14 day ‘free look’. Calls to Basis Capital had not been returned by presstime.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
