Large amount of disappointment is going to come in the lap of thousands of investors in two frozen ING funds, who were expecting the Securities Commission might investigate what some claim was misleading marketing of the funds a few years ago. 

It was confirmed yesterday by the Securities Commission, the investment markets watchdog, that it had the power to look at the proposal ING New Zealand was making to buy back the units from more than 13,000 investors in the two frozen funds, the ING Diversified Yield Fund and the ING Regular Income Fund, to examine if the offer was misleading or deceptive.

The two funds were invested in complicated debt investments overseas. ING NZ defined them as moderate risk, in the case of the DYF, and low to moderate risk in the case of the RIF.

“Based on available information, the Commission does not consider that the offer is misleading or deceptive,” said the Securities Commission yesterday. 

Due to this, it had no base to take any action in respect of the ING proposal to buy back units in the funds. On 13th July the offer will close. 

It confirmed that independent legal or financial advice should be sought by investors if they did not understand the offer or were unsure of which option to take.

Allegations of misleading marketing of the funds are being investigated by the Commerce Commission under the Fair Trading Act. 

However, it was expected by investors and financial advisers in the Frozen Funds action groups that the Securities Commission would mount its own investigation into the prospectuses and investment statements that promoted the two funds when they were launched in 2003 and 2005.

A sum of over $700 million of investors’ money was taken in by the two frozen funds, however now they are only worth nearly 20% of that. 

Investors have been offered 60 per cent of their money back by ING without admitting liability for any wrongdoing. 

If the investors want this sum, then they require surrendering rights to sue ING NZ, ANZ, which owns 49 per cent of ING New Zealand, financial planners who recommended the funds and other related parties.

(via TopNews New Zealand. Contributed by Girish Kumar Guha)