Hope no-one's using BBY stockbrokers

Caput Lupinum · May 18, 2015

The collapse of stockbroking and advisory firm BBY has reportedly left its clients with just days to find new firms before the ASX moves to close their open options trading positions.

Fairfax Media reported the development on Monday after BBY revealed it had appointed KPMG as administrator after a proposed rescue deal with financier George Wang's AIMS Financial Group fell through.

BBY chairman Glenn Rosewall informed staff on Monday morning.

"I regret to inform staff that despite exhaustive efforts by the BBY board to secure investors to inject additional capital into BBY we have been unsuccessful," Fairfax Media reported Mr Rosewall as saying in a email to staff.

"Consequently, we had no option last night but to appoint administrators from KPMG to manage the firm, effective immediately. Ian Hall and Stephen Vaughan from KPMG have been appointed as voluntary administrators of BBY and a number of its subsidiaries."

The unsuccessful deal was thought to have been between $2.5 million and $3 million.

Earlier in May BBY had fallen foul of market regulators by failing to maintain adequate capital to meet regulatory requirements.

The ASX subsequently placed heavy restrictions on the firm's options trading activities.
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http://www.smh.com.au/business/mark...-at-risk-as-asx-moves-in-20150518-gh41cn.html

Caput Lupinum · May 19, 2015

And it spreads like my rash....

Thousands of investors are bracing themselves for widespread losses following the collapse of one of Australia's biggest broking firms, BBY.

Stock brokers who used BBY run by executive chairman Glenn Rosewall, son of tennis great Ken, who also is on the board to clear trades have been collectively left millions of dollars out of pocket.

Those third party firms' own clients' funds now also are potentially under a cloud.

BBY which was one of Australia's biggest options traders and provided clearing facilities for smaller broker-dealers, known in the industry as shadow brokers is understood to have come under pressure following recent steep share market falls, particularly in bank stocks.

About 25 shadow brokers who used BBY were alerted to serious problems at the firm on Friday when commissions owing from April were not paid.

"We're furious, there was no warning that this was going to happen," said a director of one firm, who did not want to be named and is owed in excess of $100,000.
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http://www.abc.net.au/news/2015-05-...brokers-high-and-dry/6481832?section=business

whinfell · Jun 22, 2015

BBY liquidator may seek funds to pursue directors

The new liquidator of BBY may ask the corporate regulator to finance its attempts to pursue the recovery of funds from directors of the collapsed firm, after it was revealed creditors and clients were owed more than $40 million.

On Monday, KPMG transitioned from administrator of BBY to liquidator of four operating entities, and outlined that debts owed to lender St George Bank were $13 million. Other secured creditors including lessors were likely owed more than $3 million, while unsecured trade creditors had $8 million owing.

BBY's collapse last month also left 180 employees $2.7 million out of pocket. Clients faced a combined shortfall of $16 million in their accounts.

As well as the Australian Securities and Investments Commission's Assetless Administration Fund, KPMG may also seek to tap a litigation funder, or request funds from creditors to proceed with recovery action.
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SMH article: http://www.smh.com.au/business/bank...unds-to-pursue-directors-20150622-ghu6v3.html

SpacePete · Jun 22, 2015

The BBY director under investigation (still) holds a position at ASIC as a member of the oversight panel that looks at breaches of market integrity rules:

BBY chair still on ASIC panel

If ever you needed evidence of why our corporate watchdog, the Australian Securities and Investment Commission (ASIC), has such a credibility problem, take a look at the stories this week about the collapse of BBY stockbroking and its controversial executive chairman, Glenn Rosewall.

According to the SMH's excellent CBD column, Mr Rosewall is a member of ASIC's Markets Disciplinary Panel .

In ASIC's own words this is "the forum for disciplinary action against participant and market operators for alleged breaches of market integrity rules"

Just to recap then.

When the BBY broking firm was placed in administration last month it raised many eyebrows, as it has been many many years since a major broker actually went under like that.

Since the firm's collapse, and subsequent creditors' meeting, questions have been raised about the operations of the firm in the weeks, indeed months, leading to its demise.

Then last Friday came a disturbing report from administrators KPMG which claimed it might have been trading while insolvent and up to $10 million in clients funds might have been misused.

One media report talked of the possibility of charges being laid if this were found to be correct.

Imagine the surprise when on Monday it was revealed that the main man behind BBY, Mr Rosewall, has been on the ASIC panel which is charged with taking action over breaches of market integrity rules and other oversight issues.

And apparently he's still there.

You'd think ASIC might have a problem with the chief of a broking firm accused of market breaches, being on the panel that oversees brokers being accused of market breaches.

But then this is ASIC.

http://www.switzer.com.au/the-experts/janine-perrett/bby-chair-still-on-asic-panel/
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whinfell · Dec 23, 2015

Bump.

BBY demise hastened by Firestone investment, dubious practices uncovered

Liquidator KPMG's report into BBY has unmasked the scale of compliance shortcomings and dubious practices at the failed stockbroking firm, noting that the firm's investment in Firestone Energy was pivotal in denting its financial position and contributing to its demise.

BBY collapsed spectacularly in May after failing to repay loans to St George Bank and being forced by the ASX to close down its exchange traded options book. That followed several earlier run ins with the corporate regulator and ASX over the firm's capital requirements and governance practices.

KPMG is seeking directions from the NSW Supreme Court on how to distribute funds, less a $17 million shortfall in their accounts, to clients. Its detailed report was lodged with the court late on Tuesday night.

"We identified many instances in which funds were transferred between various CSAs (client segregated accounts) and between CSAs and BBYL 'house' accounts, many of which appear to have occurred in the ordinary course of business or which were ultimately 'made right' by way of return of funds," the report said.

"We also identified 'transactions of interest' which we consider to be outside of the ordinary course of business and may have led to the depletion of CSAs and shortfalls against client obligations."
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http://www.smh.com.au/business/bby-...onky-practices-uncovered-20151223-glu0px.html

and

BBY may have been insolvent since 2011

BBY may have been trading while insolvent years before its collapse, perhaps as early as 2011, a new report from the collapsed broker's liquidators claims.

The report by BBY's liquidators at KPMG has dug further back into the company's affairs than previous reports that tested only BBY's solvency from 2014.

A series of transactions using BBY clients' money to stump up a shortfall in its transactions for Saxo clients in 2011 after it bought Stonebridge have raised serious questions over whether the transactions were made to mask BBY's insolvency or for other reasons, according to the liquidators.
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http://www.afr.com/business/banking...ave-been-insolvent-since-2011-20151220-glsa63

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Hope no-one's using BBY stockbrokers

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