Monthly Archives: August 2014

A Must-Watch Documentary Exposé of LM (Aired Two Weeks Before LM Collapsed)

Most LM victims have probably already seen this video, but if they haven’t, they should.

A Betrayal of Trust

Screenshot of Peter Drake, Founder and CEO of LM Investment Management

The documentary takes a look at ripoff investment schemes in Australia. It includes multiple interviews with retirees and families who were swindled out of their life savings.

The section about LM begins at 23:27. The documentary aired on March 4th, 2013. LM went into voluntary administration two weeks later, on March 19th.

Click HERE to watch.

The LM Emails (#12): LM Was Tooting Its Own Horn Just Days Before It Collapsed

Below is an email that LM sent out to advisers just one week before it went into voluntary administration. It is followed by Martyn Terpilowski’s response.

[Update: Andrew Drummond wrote an interesting piece about the news articles cited in LM’s email. See here: “How the Media Unknowingly Colluded with LM“.]

LM’s Email


From: LM Investment Management Ltd [mailto:mail@LMaustralia.com]
Sent: Tuesday, March 12, 2013 11:40 AM
To: Martyn Terpilowski
Subject: LM in the Media

 www.LMaustralia.com

Financial Adviser/Intermediary Information Only
12 March 2013

Dear Martyn,

LM in the Media


LM maintains domestic and international media support for its 15 year history of providing investors globally access to Australian investment opportunities.

Should you have missed them, we have provided below some recent media highlights across the LM group.  These include:

  • Progress we are making with our closed LM First Mortgage Income Fund and asset sales program;
  • The real Peter Drake;
  • Completed and upcoming global registrations;
  • Imminent product launches; and
  • Significant onsite and behind the scenes works for our A$1bn Maddison Estate, and the continued growth of the LM Managed Performance Fund which now holds more than A$400m funds under management.

Recent media coverage:

Fund investors to receive payments 4 March 2013

“Investors in LM’s First Mortgage Income Fund will this week receive their first capital distribution since the fund was closed due to the global financial crisis, as property assets continue to be sold down.” view entire article

Brighter future as LM shakes off pain 1 March 2013

“LM chief executive Peter Drake likes to think his business concentrates on the “boring bits”.  However, the past few years for the global property and investment manager have been anything but boring, with the company now finding Australia as the buy order for the world.” view entire article

Maddison kicks off civil works stage February 2013

“LM has kicked off civil works at its A$1 billion Maddison Estate at Pimpama, paving the way for a development that will create 3,500 construction jobs for the city.  Civil works comprise 32 hectares of onsite works, external road works and entry into the development which will ultimately house 4,500 residents.” view entire article

Drake steps up to the plate 26 January 2013

“LM’s boss Peter Drake has put hesitation behind him and is convinced to build his profile to better impart positive messages about the business.  As LM expanded its operations further, people would start to realise just how successful the company was.” view entire article

LM boosts global growth 26 January 2013

“LM has announced plans to launch two additional funds and is continuing an aggressive push into new parts of the globe.  It has boosted its reach to more than 73 countries, with the addition of 12 last year.”view entire article

Waterfront milestone; new wave of activity 8 December 2012

“A$75m Gold Coast residential project is now under construction after off the plan sales reached more than A$25m. ‘Edgewater’ has attracted the financial backing from LM.” view entire article

Building begins on A$75m lake estate 1 December 2012

“Work has begun on a A$75 residential project undertaken by Pearls Australasia, with more than A$25m apartment and waterfront home presales confirmed.   LM has approved an A$13.6m facility to fund construction, and says it is a quality asset for the LM Australian Income Fund.” view entire article

To ensure you are updated on LM in the media, please visit the News page on the LM website athttp://www.lmaustralia.com/News.aspx

The Directors
LM Investment Management Ltd

Download a PDF version of this update

The LM products are solely for distribution via financial advisers and intermediaries. LM requests investors consult a financial adviser and read and consider the relevant disclosure document before making any decisions on their investment.  The LM Funds are not bank deposits.  This communication is general information on the LM funds issued by LM Investment Management Ltd.

privacy | contact us

© LM Investment Management Ltd 2011
Responsible Entity & AFSL No. 220281 ABN 68 077 208 461

 

Martyn Terpilowski’s Response

From: Martyn Terpilowski
Sent: 12 March 2013 19:26
To: ‘Martin Venier’
Subject: FW: LM in the Media

Sending out stuff like this is absolutely madness and thoughtless when u owe ppl money as u always tend to do – I just can’t believe I am being sent this rubbish about Peter Drake.. I just want my clients money back…. I do not care about your expansions as being part of that would be rather silly based on the number of times we have been let down. I realise that the old big upfront commissions are still convincing some brokers to invest money with a company with so many problems… the questions would have to be – why else would u choose LM? I mean there are other alternatives so why given the mess ups with the fund, with Trilogy, the negative press and the fact your problems with currency hedging constantly leading to failure to pay back clients… I mean why? Why? Why? It is sheer madness… I just want to hear when my clients will get paid and back.. Not the rest of the nonsense.

Rgds

Martyn

The LM Emails (#11): Drake Claimed that LM Was “Solid and Financially Sound”; Martyn Said It Was “Just Like Axiom Legal Financing”

Below is an announcement released by Peter Drake four months before LM went into voluntary administration. It is followed by Martyn Terpilowski’s response.

Peter Drake’s Announcement

From: LM Investment Management Ltd [mail@LMaustralia.com]
Sent: Wednesday, November 14, 2012 4:47 PM
To: Martyn Terpilowski
Subject: The LM group is solid and financially sound

www.LMaustralia.com

Financial Adviser & Intermediary Information Only

14 November 2012

Dear Martyn,

THE LM GROUP IS SOLID AND FINANCIALLY SOUND

We are pleased to provide you with a concise update on LM and the LM funds, to address any concerns you or your investors may have following some recent misleading and inaccurate information released in the public domain.   We assure you that recent articles published regarding the LM closed funds in no way affects the open LM funds that you support.

LM Investment Management Ltd is a diverse multi-fund manager currently managing nine Australian funds with total assets under management with a realisation value of A$3 billion.

The LM group is solid and financially sound.  The LM funds and their assets are healthy.  Importantly, each LM fund is a legally separated entity, with assets held separately to one another in a unit trust on behalf of investors in each fund.  All fund assets are held in trust by the independent custodian, The Trust Company (PTAL), a wholly owned subsidiary of The Trust Company, one of Australia’s largest trustees which holds A$120 billion of assets under supervision.

In the height of the financial crisis many markets around the world, including Australia, suffered as a result of the highly illiquid banking sector and market uncertainty.  One of the nine funds that LM manages, the LM First Mortgage Fund was closed in 2009, ultimately to protect investor capital.  The fund was closed not as a result of defaulting loans, but due to the fund’s banking partner, the Commonwealth Bank of Australia (CBA), making a unilateral decision to pull out of all commercial fund positions across Australia.  As a result, the fully serviced five year line of credit facility that the fund held with CBA at a value of A$150 million was pulled with less than one month’s notice.  The bank’s bureaucratic view meant the fund had to close in order to repay this facility as a priority.  Australian banks also made a decision to guarantee all bank deposits, which caused a run on this entire asset class in Australia. This one LM fund was one of thousands of other funds around the world that was gated to protect investors.

Since the closure of the LM First Mortgage Income Fund, LM has continued to prudently manage the assets on behalf of investors to retain a reasonable unit value relative to the market.  Since the fund’s closure, LM has engaged in an orderly sell down of the fund’s assets, with a view to returning capital to investors.

LM has managed and continues to operate the fund appropriately, in total accordance with Australian Corporations Law, and the fund’s constitution.  The fund is fully audited for both financial and compliance of processes with the law and the fund’s constitution.  LM’s strategy for the fund will see capital distributions to investors shortly recommence.

Trilogy is a fund raider that targets closed funds using investor information which, due to a loophole in the Australian Corporations Act, we as fund managers are legally required to hand over.  Trilogy is not well regarded in Australia, and has a deplorable track record.  The only other fund Trilogy has taken over to date is the City Pacific First Mortgage Fund, in 2009. Trilogy failed to deliver on its promises, and since taking over the City Pacific First Mortgage Fund more than three years ago the unit price has plummeted to A$0.13 under their “management”.

Unfortunately, due to the support of five large unit holders who held 53% of a feeder fund of the LM First Mortgage Income Fund, the LM Wholesale First Mortgage Income Fund, Trilogy were successful in their bid for the wholesale fund.  Trilogy was only successful in converting five investors within the fund, out of a total 237.

The LM Wholesale First Mortgage Income Fund represents less than 2.4% of LM’s total funds under management.  This fund holds no assets and operates in a feeder fund capacity only.  As such, LM retains full control of the master fund and its assets.  Trilogy was unsuccessful in its bid for other LM feeder funds, due to LM’s overwhelming global adviser support and Trilogy’s well documented poor track record.

LM is confident this will be the only fund Trilogy will be successful in replacing LM as responsible entity, and that this will go no further.  This is, unfortunately, something that has only caused disruption and angst for our investors, but little else will come of it.

It is important to note that the LM Australian Income Fund and LM Managed Performance Fund are open, fully operational and their assets are separate and segregated from those of the closed LM funds.

Whilst this act of corporate piracy is abhorrent, it in no way distracts from the daily business activities of the LM group.

For further assistance, please contact your LM regional manager or the LM client relations department on +61 7 5584 4500.

Yours faithfully,

Peter Drake
Chairman and Chief Executive Officer

LM INVESTMENT MANAGEMENT LTD
The global pathway to Australian investment solutions

Download a PDF version of this update

The LM products are solely for distribution via financial advisers and intermediaries. LM requests investors consult a financial adviser before making any decisions on their investment.

privacy contact us

© LM Investment Management Ltd 2011
Responsible Entity & AFSL No. 220281 ABN 68 077 208 461

 

Martyn Terpilowski’s Response

From: Martyn Terpilowski
To: ‘Martin Venier’
Subject: FW: The LM group is solid and financially sound

Martin

Do you not think these constant mails defending LM, just makes things look worse?… Clearly LM are not financially sound or we would not have all these problems…. It does not generally happen with a financially sound company…. 90% of brokers do not give a damn whether you are sound or not as they give you money for commission only…. There is no other reason for anyone to place money with a company that has so many problems and terrible publicity…. It is just like Axiom Legal Financing.. That was a darling of the broker market as paid big coms, but obviously was always going to blow and I sat in your office and named that fund – a number of times.. and guess what – it has blown…. I have a 100% trackrecord of predicting these things so remain very worried about LM, but ppl could not put enough money in Axiom and it certainly was not to help their clients… it is a disgusting industry and when there are other options out their it beggars belief that you would raise any new money, but we all know the reasons… The point is, the guys who still sell your fund do not really care if LM go belly up, they just want to get rich quick.. The ppl who actually care and have an ounce of financial knowledge, do not believe 90% of what is said and have severe concerns…These emails – do not help either group.

Rgds

Martyn

The LM Emails (#10): When Asked If LM Gave Special Treatment to Bond Investors, Martin Venier Dodged the Question

In February 2013, Martyn Terpilowski asked Royal London 360° why they were still allowing LM’s Managed Performance Fund (MPF) on their platform even though the fund had no liquidity. He pointed out that his own client had been waiting for well over two years to get his money back.

RL360° responded that they were not aware of any liquidity issues. LM always paid them back on time.

Martyn was stunned. He’d never heard of anyone getting their money back quickly. If RL360° was telling the truth, it indicated that bond investors were being allowed to jump the queue ahead of direct investors like his client.

Martyn sent an email to LM sales manager Martin Venier to find out what was really happening. He asked Venier:

“are [bond] clients not waiting for their redemption money in the same way as [my client]?…Please advise as I thought all investors had to be treated equally.”

Venier’s response appears to have been a kind of half-truth, or maybe a quarter-truth, or maybe just a lie. Only the bond providers would know for sure.

Instead of answering whether LM was prioritizing bond investors (they clearly were), he implied that bond providers were bypassing LM and making fast-track redemption payments via their own ponzi-like transactions. He said LM had nothing to do with it.

Venier concluded by saying, “Hope the above adds clarity.”

Venier’s answer was most likely pulled out of thin air. If not, then bond providers have some explaining to do. The type of artificial liquidity which Venier described would have concealed MPF’s real liquidity problems, raising questions about whether bond providers knew what was really happening beneath the surface.

Conversation with Royal London 360°

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 25 February 2013 23:46
To: RL360 Investment Accounts; RL360 Dealing
Cc: ‘Servicing Centre’; [RL360 Employee]
Subject: FW: [XXXXXXXX]

My question is – how come you accept LM at all? It is totally illiquid (whatever they say). Brandeaux has a 6mth tie up and you will not accept? I do not understand. Please let me know.

Cheers

Royal London 360°

From: RL360 Asset Review [AssetReview@rl360.com]
Sent: Tuesday, February 26, 2013 7:39 PM
To: Martyn Terpilowski
Subject: RE: [XXXXXXXX]

Dear Martyn,

My colleagues have forwarded your e-mail and comment in respect of asset acceptability.

Thank you for your comments, however, this isn’t our experience of either of the funds you’ve mentioned, but we appreciate your feedback.

Kind regards 

[RL360 Employee]
Royal London 360°
www.rl360.com

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 27 February 2013 02:41
To: RL360 Asset Review
Cc: [RL360 Employee]; ‘Servicing Centre’
Subject: RE: [XXXXXXXX]

Hi

I was told by [two RL360 employees] that you do not take Brandeaux as liquidity is 6 mths + (that is a fact).

There is a 2 year waiting list on getting money out of LM (fact).

So why do u accept LM and why do u not accept Brandeaux or do u?

Please advise.

Martyn

Royal London 360°

From: RL360 Asset Review [AssetReview@rl360.com]
Sent: Wednesday, February 27, 2013 5:50 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]; Servicing Centre
Subject: RE: [XXXXXXXX]

Dear Martyn,

Which LM fund are you referring to?

Kind regards

[RL360 Employee]

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 27 February 2013 17:55
To: ‘RL360 Asset Review’
Cc: [RL360 Employee]; ‘Servicing Centre’
Subject: RE: [XXXXXXXX]

All LM funds are gated – whatever they say – I have clients waiting over 2 yrs for the money back from the MPF.

What about Brandeaux? 6mths liquidity? Do u accept it?

Martyn

Royal London 360°

From: [RL360 Employee]
Sent: Wednesday, February 27, 2013 6:28 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]; [RL360 Employee]
Subject: FW: [XXXXXXXX]

Hi Martyn

[An RL360 Employee] has asked me to respond to you as I am responsible for the area that accepts or rejects assets on our products.

LM as you say do have significant redemption queues on some of their funds however, the funds that we have on our platforms that are open for new investments are paying redemptions in accordance with their funds T & C’s and the parameters we have agreed with them. Where any fund continually fails to adhere to its own terms we remove it from our platforms.

Brandeaux has a standard 6 month liquidity period which exceeds our company set limit of 5 months. However, Brandeaux also have a lot of discretionary powers in their documentation which allows them to continually defer redemptions until such time as they feel it is in the best interests of the fund to pay them. It is this ability to defer (albeit completely legal) which creates difficulties for us and as such we do not accept any funds which have similar provisions.

Regards

[RL360 Employee]
Royal London 360°
www.rl360.com

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Thursday, February 28, 2013 1:26 AM
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]

[RL360 Employee]

I think that fund is MPF – it is illiquid whatever they say. They use semantics so they can get on platforms, but has anyone ever redeemed? I bet not. I 100% gtee that fund is effectively ‘gated’. If not, please confirm it is MPF and that you have redeemed. As far as I know everything they have has queues and they lie about it. I can gtee that.

Brandeaux are actually honest and I like that far more.

Rgds

Martyn

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 28 February 2013 01:35
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]

Please confirm this as if you have actually redeemed money from MPF I need to know. I am sure you have not, but await your confirmation.

Cheers

Martyn

Royal London 360°

From: [RL360 Emloyee]
Sent: Friday, March 01, 2013 5:52 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]

Hi Martyn

The LM MPF has quite a few different classes and we have had no adverse experiences of this fund. All redemptions are paid to us in accordance with the respective asset classes T & C.

I’m not sure where we are going with this, are you asking us to change our view on Brandeaux and accept it?

Regards

[RL360 Employee]

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 02 March 2013 02:55
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]

No not at all – I am just telling you LM lie and it is not liquid and under the legislation governing the fund, they should not be making special agreements with bond providers so that your clients have benefits that my direct clients do not. My clients were told there were no issues with liquidity but 2 yrs on are still waiting for their money back. That is my only point. Not to get Brandeaux in – but just be careful with LM – they may tick your boxes, but is it the truth? They are a dangerous organization and only used by brokers for commission – do some research, they have all kinds of issues.

Rgds

Martyn

Royal London 360°

From: [RL360 Employee]
Sent: Monday, March 04, 2013 7:12 PM
To: Martyn Terpilowski
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]

Hi Martyn

Thanks for the note. We do keep a very close eye on all things LM related and have regular meetings/call with them to ensure that any issues that we hear about do not impact on our clients. The whole Trilogy take over issue has been quite detrimental to them and we are not seeing too many brokers using their funds these days.

Regards

[RL360 Employee]

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 05 March 2013 09:02
To: [RL360 Employee]
Cc: [RL360 Employee]
Subject: RE: [XXXXXXXX]

Well in my experience talking to their Directors is a waste of time as they are liars and not fit to be running a company. You would have thought after the absolute mess up with Trilogy that no platform or broker would touch them, but that is not my experience as they seem to be raising loads for MPF still – paying 9% in soft commissions – they paid 3% when it was going well…. Shocking.

Rgds

Martyn

Conversation with Martin Venier

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Saturday, 2 March 2013 11:49 AM
To: Martin Venier
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)

Hi Martin

Can I just confirm something – with MPF that you have in portfolio bonds – are those clients not waiting for their redemption money in the same way as [my client]? i.e. are they being advantaged by not holding direct?

Please advise as I thought all investors had to be treated equally.

Rgds

Martyn

Martin Venier

From: Martin Venier
Sent: Monday, March 04, 2013 10:58 AM
To: ‘Martyn Terpilowski’
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)

Dear Martyn,

Please see the attached Information Memorandum, which describes the different unit classes, including direct and those for portfolio bond holders.

The investors in a portfolio bond is the bond itself.

There are a whole lot of end investors in our fund that we do not know, as the only way we can find out about the end investor is when an advisor notifies us for the receipt of commission.

Bond portfolio net balances grow over time, and it would include the bond making redemptions and adding money.

For example, if there a net increase in investments from a bond by $1 million, it might be made up of $2 million of inflows and $1 million in redemptions, but since there is legally one client involved, the bond itself, they can do whatever they like with the fund and make the redemptions.

Hope that makes sense.

Kind regards,

Martin

Martin Venier
Regional Manager International | Treasury
+852 2501 0262 | +61 2 8268 0100 | +852 9226 0708 | +852 2530 1076 | mvenier@lmaustralia.com | Skype: mvenier.lminvestment
A 16/F Aon China Building 29 Queens Road Central, Central, Hong Kong S.A.R. | 16/F Aon China Building 29 Queens Road, Central, Hong Kong S.A.R.
www.LMaustralia.com

LM provides a global pathway to Australian investment solutions, and holds under management Australian assets with a gross realisation value in excess of A$3 billion. LM receives new business inflows from a licensed intermediary network spanning more than 75 countries, serviced by 130 LM people across nine global offices. The LM Funds are authorised by the financial regulators of Australia, New Zealand, Luxembourg and Singapore, with further approvals imminent in the jurisdictions of the USA, Canada, the United Kingdom and Pan-European UCITS.  Options include cash; savings; conservative, enhanced and retirement income – debt securities and cash; Luxembourg domiciled SICAV-SIF; Australian equities – protected income and capital protected growth.

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Monday, 4 March 2013 10:11 AM
To: Martin Venier
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)

Mmm – I see.. I guess there is always a way to get new money in, whilst not paying clients their money back… As long as the broker gets the commission and u get on the platforms all is good – except for the ppl who have been waiting for their money back for nearly 3 yrs. Brandeaux can’t get on platforms anymore as are honest about 6 mths liquidity…But they don’t pay com, so far less pressure from brokers to put on the platform. Just shows this industry really is a joke.

Have a good day.

Martyn

Martin Venier

From: Martin Venier [mvenier@lmaustralia.com]
Sent: Monday, March 04, 2013 2:15 PM
To: ‘Martyn Terpilowski’
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund)

Dear Martyn,

I am not sure if you have a further question, but it is fairly simple, the bond is an individual investor, and in that regard it is no different to any investor pulling out a sum of money from MPF, that’s smaller than the amount they put in.  A husband might put 50,000 in MPF, half is his wife’s and half is his. His wife wants her money back in 6 months, while he wants to add an additional 50,000.  He simply pays his wife 25,000, and 25,000 to MPF – all we see is a net increase.  In effect, that’s what happens with the bonds.  We would not know about the 25,000 redemption to the wife, as the investment is in the husband’s name, but in the case of the bonds, advisors notify us to collect commission, but it makes no difference to us as long as the net balance increases.  The situation does not hold for direct business, as it is made up of a huge amount of smaller balances, with different owners.

Hope the above adds clarity.

Have a good week.

Kind regards, Martin

Martin Venier
Regional Manager International | Treasury
+852 2501 0262 | +61 2 8268 0100 | +852 9226 0708 | +852 2530 1076 | mvenier@lmaustralia.com | Skype: mvenier.lminvestment
A 16/F Aon China Building 29 Queens Road Central, Central, Hong Kong S.A.R. | 16/F Aon China Building 29 Queens Road, Central, Hong Kong S.A.R.
www.LMaustralia.com

LM provides a global pathway to Australian investment solutions, and holds under management Australian assets with a gross realisation value in excess of A$3 billion. LM receives new business inflows from a licensed intermediary network spanning more than 75 countries, serviced by 130 LM people across nine global offices. The LM Funds are authorised by the financial regulators of Australia, New Zealand, Luxembourg and Singapore, with further approvals imminent in the jurisdictions of the USA, Canada, the United Kingdom and Pan-European UCITS.  Options include cash; savings; conservative, enhanced and retirement income – debt securities and cash; Luxembourg domiciled SICAV-SIF; Australian equities – protected income and capital protected growth.

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 04 March 2013 14:17
To: ‘Martin Venier’
Subject: RE: First Mortgage Income Fund and related feeder funds (eg. Currency Protected Australian Income Fund) 

I understand, just think it is a little strange. Anyway – Have a good day.

MT

The LM Emails (#9): Royal Skandia and Friends Provident Turned a Blind Eye When Warned about LM’s Suspicious Conduct

Martyn Terpilowski says it’s easy to spot dodgy investments. High commissions, high management fees, and unrealistic rates of return are three of the biggest warning signs.

Martyn first noticed something was wrong with LM’s Managed Performance Fund (MPF) in 2009 when LM started lying to investors about liquidity and then kept campaigning for cash while redemption payments were indefinitely “delayed”. A few of Martyn’s clients had invested in the MPF at around 2005-2006, so he had a responsibility to keep a close eye on it.

Several years ago, Martyn also noticed some things he didn’t like about a different fund run by Castlestone Management, and he predicted that it would run into problems. In July 2011, when Castlestone’s offices were raided by the Financial Services Authority (the British regulator), he forwarded the news headlines to bond providers Generali International and Royal Skandia, and he warned them that LM would be in trouble next. 

Both life companies ignored him.

Six months later, after one of Martyn’s clients had been waiting in the MPF redemption queue for a year and a half, he requested an update on his client’s position. The numbers he received indicated that scores of investors were jumping the queue. For the next several weeks, Martyn pressured LM for an explanation, but no one would tell him the whole truth. He suspected that LM was hiding a serious problem.

Martyn subsequently sent emails to Royal Skandia and Friends Provident International (FPI). He strongly advised them to stop accepting new MPF investments.

In one email to Skandia, Martyn said:

“This is dodge – I swear on my life…I hate to say it but I do not think the money is coming back and I cannot let this continue and more people get duped.” 

He forwarded dozens of suspicious emails that he’d received from LM, and he even offered to speak in front of the investment boards of both companies. 

Most of the emails Martyn forwarded to Skandia and FPI have been published on this blog over the past two weeks. (See here and here.)

Upon seeing the emails, FPI put an immediate block on new investments into MPF and promised to investigate further.

Skandia said they’d consult with FPI and also conduct an investigation.

However, just one week later, Skandia stopped responding to Martyn’s emails. No one ever contacted him again, and Friends Provident swiftly unblocked the MPF.

Stunningly, both Skandia and FPI continued to accept new MPF investments until the moment LM collapsed, one year later in March 2013.

Martyn’s emails to Skandia and Friends Provident contained an abundance of alarming information, including proof of MPF’s chronic redemption delays, possible ponzi activity, large commission increases, and LM’s habitual lack of honesty.

Because Skandia and FPI turned a blind eye, they are undoubtedly responsible, at least in part, for the devastating financial losses suffered by those investors who bought the MPF through their platforms after April 2012.

They are also partly responsible for the losses suffered by those who were stuck waiting in the MPF redemption queue indefinitely. According to a recent news article, both Skandia and FPI have admitted that they did not experience major redemption delays. This means they were jumping the queue in front of people like Martyn’s client, and they knew they were doing it. They were therefore undoubtedly complicit in LM’s unfair treatment of certain classes of investors, namely direct investors.

Supposing Skandia and FPI knew about LM’s questionable conduct well before receiving Martyn’s emails—and they should have known, given that Martyn and his colleagues had independently spotted numerous red flags as early as January 2009—then Skandia and FPI could be on the hook for even more blame.

They are already being harshly criticized for allowing unlicensed advisers to sell MPF (a high-risk “sophisticated investor” fund) to inexperienced investors and retirees via their platforms.

When asked why he thought Skandia and Friends Provident had behaved so recklessly, Martyn said, “They were afraid of losing market share.” A Skandia executive once told him, “If we don’t take [the MPF], then someone else will. It is very popular with brokers.”

Four sets of emails are copied below and arranged in roughly chronological order. Key sentences have been highlighted in red.

Warning to Generali International, July 2011

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Thursday, July 21, 2011 12:16 AM
To: [Generali Employee]
Cc: [Martyn’s Colleague]; [Martyn’s Colleague]
Subject: Are u reallly sure u want to be taking these guys around with you and having them on your platform – i hate to say it but right again!!!!

http://www.ftadviser.com/InvestmentAdviser/Investments/News/article/20110720/928a9f1c-b2c9-11e0-a7cc-00144f2af8e8/FSA-raids-Castlestone-offices-in-latest-blow-to-group.jsp

Best regards

Martyn

Generali International

From: [Generali Employee]
Sent: Thursday, July 21, 2011 8:59 AM
To: [Martyn Terpilowski]
Cc: [Martyn’s Colleague]’; [Martyn’s Colleague]
Subject: Re: Are u reallly sure u want to be taking these guys around with you and having them on your platform – i hate to say it but right again!!!!

Hi Martyn

I believe Castlestone are co-operating with the FSA [Financial Services Authority] as per another headline I saw, but I guess that’s not as sensational and headline grabbing as the [above].

Guess we’ll have to wait and see what the fallout is after the investigation has closed.

In the meantime, how’s business?

Regards

[Generali Employee]

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 21 July 2011 09:07
To: [Generali Employee]
Subject: RE: Are u reallly sure u want to be taking these guys around with you and having them on your platform – i hate to say it but right again!!!! 

The thing is it is so obvious it is dodge if u actually watch how they can’t even follow the Gold price – I have known this well before all this started…. But it is just totally unsurprising…

LM next – u heard it here first – very similar meglamaniacs in charge who are dangerous people…

Biz – ok – did a big direct Winton deal yesterday for a referral… apart from that bits and bobs – usual…

MT

Warning to Royal Skandia, July 2011

From: Martyn Terpilowski
Sent: Thursday, July 21, 2011 8:17 AM
To: [Skandia Employee]; [Skandia Employee]; [Skandia Employee]
Subject: LM next – watch this space.. scary…

http://www.ftadviser.com/InvestmentAdviser/Investments/News/article/20110720/928a9f1c-b2c9-11e0-a7cc-00144f2af8e8/FSA-raids-Castlestone-offices-in-latest-blow-to-group.jsp

Best regards

Martyn

Warning to Royal Skandia, April 2012

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 11 April 2012 20:22
To: [Skandia Employee]
Subject: FW: LM

Mate – I have mentioned this before, but I think you guys should seriously look at whether you should be taking LM business. It is going to go very wrong. I can fill you in on the details whenever, but I have clients with a couple of million in there who have been in waiting lists to get there money back a number of years. The information I get from them is also very shady indeed. Please see emails below.

I am very serious. It does not make sense anyway you look at it.

Rgds
Martyn

Royal Skandia

—–Original Message—–
From: [Skandia Employee]
Sent: Thursday, April 12, 2012 10:33 AM
To: Martyn Terpilowski
Subject: RE: LM

Hi

Thanks for the heads up – will feedback comments / info internally and we will investigate further.

Cheers

[Skandia Employee]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 12 April 2012 09:38
To: [Skandia Employee]
Subject: RE: LM

Mate – I have hundreds of docs where this come from and happy to go infront of your investment board – they cannot get away with this any longer. It is disgusting what they are doing. MT

Royal Skandia

—–Original Message—–
From: [Skandia Employee]
Sent: Thursday, April 12, 2012 10:41 AM
To: Martyn Terpilowski
Subject: RE: LM

Ok will keep you posted from our side

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 12 April 2012 09:46
To: [Skandia Employee]
Subject: RE: LM

This is a huge issue and funnily enough very popular with brokers – what chance do the honest people have??

Royal Skandia

—–Original Message—–
From: [Skandia Employee]
Sent: Thursday, April 12, 2012 6:25 PM
To: Martyn Terpilowski
Subject: RE: LM

Hi

Do you have some additional info that you can pass on for us to review further?

Thanks
[Skandia Employee]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, April 12, 2012 6:34 PM
To: [Skandia Employee]
Subject: RE: LM

Mate – I have pages and pages and pages – will send u a few… This is dodge – I swear on my life and I have tried to deal with it internally but there is no way I can do it anyway – I hate to say it but I do not think the money is coming back and I cannot let this continue and more people get duped..

They just keep telling us about selling assets that never happens and my client has waited over 2 yrs (this was a 1yr investment).. There solution to the problem, indemnify commission by 3 yrs and pay brokers 9% upfront – that should shut people up and they cant get their money anyway… I mean mate – the waiting list is at least 2 yrs and they now refuse to give queue numbers, which they used to give… It is ridicoulus – I will send some more stuff. If they are taking so much in, how can they never pay it out? It is like Ponze plus scheme and these guys are scary as speak like this is normal….I am very serious and worried for the $3m I have in there total.

We all understood the situation with the markets but this is different. Clients would NEVER invest if they knew this and you know that.

Stuff coming over now.
MT

Royal Skandia

—–Original Message—–
From: [Skandia Employee]
Sent: Thursday, April 12, 2012 6:41 PM
To: Martyn Terpilowski
Subject: RE: More LM

Ok thanks – will feed all of this on for further review

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 12 April 2012 17:39
To: [Skandia Employee]
Subject: More LM

And – please think about it. It is very obvious and scary.

Good evening.

MT

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 12 April 2012 17:45
To: [Skandia Employee]
Subject: RE: More LM

Mate – I know it looks like this is personal, but I do not want anyone else to lose their money. I fear for my clients $3m and this biz is all 4yrs old+. I stopped doing LM biz when they carried taking in and just closed to redemptions without telling anyone. They lied and then just increased commissions to get more support. Brandeaux dealt with this completely differently and far more professionally. LM’s attitude scares me. I am happy to meet anyone from RSK and back this up. Enough is enough.

Martyn

Royal Skandia

—–Original Message—–
From: [Skandia Employee]
Sent: Thursday, April 12, 2012 6:50 PM
To: Martyn Terpilowski
Subject: RE: More LM

Ok understand, I know we are following up with FPI as well so will keep you posted.
Cheers

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, April 12, 2012 6:57 PM
To: [Skandia Employee]
Subject: RE: More LM

Cheers mate – Martin Venier reckons I do not get it because I am not Australian…. Pretty good explanation of why nothing adds up.

There other funds are in an absolute mess also. I used to like them, but I know lies when I see them and there are lots here.

I just want real answers and so should you and FPI. How can a fund that is taking so much in, have people waiting for more than 2 yrs to get their money back from the end of the 1 yr term? How can they be expanding if this is the case? And where is the money? – I thought taking in when not paying out was illegal. They say queue but 2 yrs + to me is closed and they will not even give a queue number for clients anymoreAt best it is being sold by every broker under false pretences – as no one would ever invest if this was highlighted to them – the 1 yr fund that may be 10ys and we have no responsibility to tell u when u might get your money back, but do not worry – trust us we are Australian. Rubbish.

Have a good evening. I am looking fwd to hearing from their lawyer.

MT

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 18 April 2012 12:41
To: [Skandia Employee]
Subject: RE: More LM

You guys found all this out now?

MT

—–Original Message—–
From: Martyn Terpilowski
Sent: 28 April 2012 09:47
To: [Skandia Employee]
Subject: RE: More LM

Any news on LM? I know they reckon they have no list anymore as it was lost in a computer system error and young girls in the office were using the wrong files for the queue numbers for their clients to get their money back, but my client is still no closer after 2 yrs to getting any money back. This is illegal in many countries (Taking money in and not paying out).

Please let me know what you have discovered.

cheers

Martyn

Warning to Friends Provident International, April 2012

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, April 11, 2012 8:23 PM
To: [FPI Employee]
Subject: FW: LM

Mate – I think I have mentioned this before, but I think you guys should seriously look at whether you should be taking LM business. It is going to go very wrong. I can fill you in on the details whenever, but I have clients with a couple of million in there who have been in waiting lists to get there money back a number of years. The information I get from them is also very shady indeed. Please see emails below.

I am quite serious. It does not make sense anyway you look at it.

Rgds
Martyn

Friends Provident International

—–Original Message—–
From: [FPI Employee]
Sent: Thursday, April 12, 2012 9:41 AM
To: ‘Martyn Terpilowski’
Subject: RE: LM

Hi Martyn

We’ve put a block on new investment into LM MPF while we look at the answers regarding the delay in redemptions. The life offices talk to each other, so I wouldn’t be surprised if the others have put a block in, too.

You can imagine that IFAs don’t give me much negative feedback about this fund, so thanks very much for sending this.

Let me forward this email to our guys looking at this.

Would love to hear about Melanie using the wrong file! Better still, read the emails from LM about it. Hard evidence required.

Thanks again.

[FPI Employee]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, April 12, 2012 10:24 AM
To: [FPI Employee]
Subject: RE: LM

Hi [FPI Employee]

Yes it is true that no IFA will tell u this which is a damning indictment on the industry. I believe they now have a 3 yr term where they indemnify the commission (9%). This keeps the broker happy and also prevents any questions on you getting your money out. We all understand whay happened in the Lehman crisis and clients never saw these as bank deposits as Martin Vennier suggests they were sold. These hold ups have now become unexplainable. When Brandeaux stopped paying out, they stopped taking money in – that is the norm in these cases and I have no issues with that. This after all is a 1 year term and my client has been in over 3 yrs and getting no closer to getting his money back. We have been promised that clients waiting will get there money back through the sale of assets etc, but this has gone on for years and LM are expanding and taking lots of money in!!! I have over $3m of clients money still in there and fear it will never return. When you talk to these guys, they seem to be on a different planet which is very scary. They act as if they do not see the issue and as long as the client is getting the return, why does he need the money so desperately? but it scares me and this stable unit price could just be made up. Look at the MIF unit price that has steadily come down to 0.73 from 1.00. The fact anyone still deals with LM is amazing as there is no way a client would invest if they knew there was a 2yr+ waiting list on the backside and we are no closer to knowing how yr+ long the queue really is or more likley if it exists?. There used to be a queue system, but Martin refuses to give those numbers out now and says they were just a mix up from a file in the office by Melanie as there are host of factors that affect redemptions, but they are taking loads in apparently….Surely I am not the only one who sees this as wrong and my client is now going legal as it has gone on too long. These guys are dangerous meglomaniacs (like Madoff or Stanford) who just talk a game, that makes no sense when looked at – will fwd u some other stuff also as I am going nuclear on them. They have left me with no choice.

Please share this with Skandia, although I have mentioned to [a Skandia employee already].

Rgds
Martyn

LM Victims Launch Lawsuits Against Advisers, Trustees, and Insurance Companies

According to a new article in the South China Morning Post:

“Australian-based investors have already won lawsuits because financial advisory firms gave inadequate advice and did limited due diligence, said Fraser Whitehead, head of group litigation at law firm Slater & Gordon.

The challenge was harder for Asia-based expatriates as many financial advisers have no professional indemnity insurance. That made insurers and trust companies a natural target for litigation, Whitehead said.

Several LM investor groups told the South China Morning Post that they were now consulting lawyers and filing suits. In Hong Kong, investors are also lodging complaints with regulatory authorities and the police.

Investors argue that insurers and trust companies have duty of care and fiduciary responsibilities.”

The entire article can be read HERE.

Different Toxic Fund, Same Greedy Advisers: Scattered Axiom Victims Are Trying to Find Each Other

Axiom Victims Group

Martyn Terpilowski’s LM emails have been receiving a lot of attention over the past week. As a result, one victims group organizer thought it would be a good idea to reach out to other victims who are reading this blog. A letter received from that organizer is copied below.

Many LM victims are also victims of another toxic fund known as Axiom Legal Financing. Axiom collapsed only months before LM. According to media reports (see here and here), the fund is alleged to have been a scam. Unsurprisingly, Axiom paid abnormally large commissions and was sold by many of the same advisers who sold LM’s Managed Performance Fund. 

The South China Morning Post recently reported that Axiom was sold by a group of companies owned by CIB committee member Mark Kirkham. His companies are currently under scrutiny for selling a separate toxic litigation fund (Centaur Litigation) without a proper license. Interestingly, one of Kirkham’s advisers, Andrew Wood, is reported to have been selling LM in Thailand without a license (see here).

A Request for Help

Hi

May I start by saying how much I appreciated your article on LM and what you are doing with Martyn’s emails on your site.  As an LM victim – thank you and keep it up please!

Not only was I an LM victim but I was caught in Axiom as well.  Well over half my life savings just vanished between the two of them.  Anyway there is a reason I am writing.

Axiom was sold to 2,000 victims pretty much world wide we believe and targeted at older expats by IFAs. Mostly we wanted low risk but were sold high risk. Many of us are pensioners and needed that money to pay for care etc in our old age.  We need to get as much back as possible and have not got enough left for individual legal action.

A few of us have got together as a group and have a UK group action lawyer on the case, but we need more numbers for the legal case to run.  I am sending letters to the press and writing on forums but just do not seem to be able to reach victims. It is a bit like looking for a needle in a haystack!

We have an embryonic website just started www.axiomlegalfinancinggroup.com and I can be reached by victims through info@axiomlegalfinancinggroup.com.

As quite a few of us (expats here in Spain) were sold LM and Axiom together, we wondered if you could give us a little bit of space to run an ‘advert’ for Axiom victims alongside your LM letters from Martyn?  You certainly seem to have the attention of LM victims at the moment!!!

Axiom we know was sold in the UK, Europe, Cyprus, Thailand, Hong Kong, Singapore, The Arab countries and we suspect Australia , New Zealand and possibly America as well.  It is really hard to reach so few people in such a large area, so we need all the help we can get. Anything you can do, or suggest, would be very much appreciated.

Please help us if you can.

PS for LM victims. Our lawyers are looking at starting an LM case shortly for UK/Europe.  If any LM victim wants to send us an email, via the Axiom address above, you will be put on a list. The more names on that list the better the chance the case will run.

The LM Emails (#8): Scores of Investors Appeared to Be Jumping the Queue, but LM Refused to Provide a Full Explanation

After threatening legal action in late 2010, a client at Martyn Terpilowski’s advisory firm was able to get his money out of LM’s Managed Performance Fund. (See here.)

This gave Martyn a bit of hope that his client (“Client 1”) would eventually get his money back after entering the redemption queue in mid-2010.

A year and a half later, all that hope was gone.

In late 2011, Martyn’s client decided to submit forms to receive the maximum amount of distribution income possible. This would ensure that he’d at least get a little of his money back, if he couldn’t get all of it.

Martyn’s client also asked for an update on his positions in the redemption queue (he had five accounts). When he received the latest numbers, he noticed something unusual. Some of his accounts had advanced in the queue only half as many positions as the others. This suggested that other investors were cutting in front of him.

The chart below shows the client’s queue positions in Aug. 2011 and Jan. 2012. The column on the right shows how far each account progressed during that five-month period.

Queue Chart

Account B moved up 107 positions while Account C only moved up 47 positions. This suggested that at least 60 investors (107 – 47) had been allowed to cut in front of Account C.

Martyn’s client demanded an explanation.

Operations manager, Melanie Gomez, came back with the following response:

“LM is not normally in the practice of providing where an investment sits within a redemption queue as it does not reflect what is actually happening behind the scenes.”

The statement seemed dishonest. LM apparently was in the practice of providing queue numbers, otherwise they wouldn’t have given numbers to both Martyn’s client and his colleague’s client. Moreover, by saying that the queue numbers didn’t reflect what was “actually happening behind the scenes”, she was implying that the queue numbers were deliberately misinformative.

Martyn and his client were extremely upset. They demanded a better explanation.

Martin Venier eventually responded by acknowledging that some investors were allowed to cut in the queue if they could prove they were suffering from a severe hardship. For example, he said one cancer patient had recently been allowed to cut because he needed money to pay for medical treatment.

The story about the cancer patient may have been true, but it seemed extremely unlikely that 60 investors (approximately 40% of the people in the queue between Accounts B and C) were all suddenly suffering from some kind of severe hardship. It was far more likely that LM was letting some investors jump to the front of the queue for reasons that Venier wasn’t disclosing.

After arguing with LM for several weeks via email and telephone and in face-to-face meetings, Martyn and his client never got a satisfactory explanation. LM also stopped providing queue numbers. Martyn says LM claimed that the queue numbers were lost in a file mix-up after an IT system upgrade.

Sixty-nine emails are copied below in chronological order, stretching from Dec. 2011 to May 2012. Key sentences are highlighted in red. 

December 2011

Client 1

—–Original Message—–
From: [Client 1]
Sent: Monday, December 19, 2011 3:59 PM
To: Martyn Terpilowski
Subject: Distribution payouts

Martyn,

I would like to receive as much distribution income as possible including the past distributions from all of my LM investments this month.  Would I need to fill out any forms?

Thanks
[Client 1]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Tuesday, 20 December 2011 8:56 AM
To: Melanie Gomez; Shauna Larkin; Martin Venier
Cc: [redacted]
Subject: FW: Distribution payouts

Dear All

Please see mail [above] from [Client 1]. He wants to start taking income from all his LM investments. Can you please send the paperwork over to me that he needs to complete? I am not sure he will be able to take past distributions, but can you please advise on that.

Also, are we still looking at Jan / Feb for his redemptions?

Please let me know on all of this ASAP.

Rgds
Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Tuesday, December 20, 2011 5:31 PM
To: ‘Martyn Terpilowski’; Shauna Larkin; Martin Venier
Cc: ‘[redacted]
Subject: RE: Distribution payouts

Dear Martyn

Further to your e-mail earlier I have been able to locate the investor and the account numbers are listed below;

[AXXXXXXXX] MPF
[BXXXXXXXX] MPF
[CXXXXXXXX] MPF
[DXXXXXXXX] MPF
[EXXXXXXXX] MPF

If the investor would like to have interest paid going forward then they will need to complete the attached form and state how often they require this payment to be made (monthly, quarterly etc.).

Existing interest cannot be paid as this will be classed as redemption payment too.

With regards to when the above redemptions will be made I can’t confirm a date yet.

If you have any further questions please don’t hesitate to contact me

Many Thanks

Mel

Melanie Gomez (Peake)
Operations Manager International

One Year Fixed Income with 100% Capital Protection for the first 30% stock price fall (ASPF3)

AUD : 12.50% pa, EUR: 10.00% pa, GBP: 9.00% pa, USD:9.00% pa

Available until 27 January 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 21 December 2011 10:35 AM
To: Melanie Gomez; Shauna Larkin; Martin Venier
Cc: [redacted]
Subject: RE: Distribution payouts

Hi Melanie

Thanks for this. I will tell [Client 1].

Although you can not confirm the exact dates for redemptions, I would hope you could give some kind of idea. We have been told Jan /Feb – has this changed? I have made my views quite clear on taking money in to a fund that is effectively closed – it is just so not allowed in most places in the world for obvious reasons. Clients clearly would not invest if they knew about this when investing but they do not – which is wrong. I know LM hide behind semantics and dodgy brokers will not tell their customers due to the commission levels, but it is wrong on so many levels and anyone working long term in finnace will tell you that. This is not an opinion, it is very factual or it would be allowed in all regulated markets? As Peter said with the MIF [First Mortgage Income Fund] which was sold mainly in Australia – ‘we can’t take more money in when we would be using it just to pay the bank loan back?’- not sure what the difference is with MPF [Managed Performance Fund] when money is taken in and then effectively used to pay off the redemption requests. I guess this is good for me, but I would not have lost my faith in LM if this had not been the case and I would not be so worried which I genuinely am. Anyway – been through this and realise there are no checks and balances at LM. There is certainly no way I would look at any further investment, which is sad as I was a big fan in the past.

Anyway – I need to know some kind of time frame for this clients money. I was told Jan/Feb before so hoping this has not changed dramatically.

Rgds
Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Wednesday, December 21, 2011 5:03 PM
To: ‘Martyn Terpilowski; Shauna Larkin; Martin Venier
Cc: [redacted]
Subject: RE: Distribution payouts

Dear Martyn

Thank you for your e-mail.

After touching base with h/o [head office] and looking at where these investments sit in the redemption queue it is ‘possible’ that payment may be made during the 1st quarter of 2012. However this is not guaranteed as there are a number of factors can stop this from happening.

If the fund projections continue as expected into the first half of next year we may be able to give you some certainty on timing of payments but at this moment in time it is too early to say.

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

One Year Fixed Income with 100% Capital Protection for the first 30% stock price fall (ASPF3)

AUD : 12.50% pa, EUR: 10.00% pa, GBP: 9.00% pa, USD:9.00% pa

Available until 27 January 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, December 21, 2011 5:41 PM
To: ‘Melanie Gomez’; ‘Shauna Larkin’; ‘Martin Venier’
Cc: [redacted]
Subject: RE: Distribution payouts

It is just so wrong and ridiculous that this money is ‘still locked up’ as you continue to prospect for new biz in the same fund…. Do you think any client would put money in here if they KNEW this situation???… Ok – it may work out ok, but there is no clarity whatsoever and it clearly is not being discussed with new investors. This client is and has been very upset for a long time… I really hope we can see this redemption paid in Jan/Feb as was stated – at least I may feel LM are moving in the right direction.. right now I just see marketing for new biz whilst this situation remains – which would leave a bad taste in the mouth of most honest people… It actually scares me how so many people seem not to get what is wrong here …
including the CEO which is the most scary part…

Merry Xmas..

Martyn

January 2012

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Tuesday, January 03, 2012 11:52 AM
To: ‘Martyn Terpilowski’; Martin Venier
Cc: ‘[Martyn’s Assistant]’
Subject: RE: FW: FW: Further Question [Client 1]

Dear Martyn

As requested please see below the LM a/c numbers for this client’s investments and where they sit in the redemption queue.

[A########]        Queue no. 128
[B########]        Queue no. 129
[C########]         Queue no. 29
[D########]  Not included on the report as redemption request was only received on 30/12/2011
[E########]        Queue no. 30

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

Martyn Terpilowski

—– Original Message —–
From: Martyn Terpilowski
To: “‘[Client 1]'”
Subject: FW: FW: FW: Further Question [Client 1]
Date: Tue, 3 Jan 2012 18:14:14 +0900

Dear [Client 1]

Here is where you are in the redemption queues. I have had clients who have received money, so do not worry that this will not happen as it will. Hopefully before the end of Feb as we have discussed.

They have confirmed they will get back to me on the rate in the next few days.

Have a good evening.

Martyn

Client 1

—–Original Message—–
From: [Client 1]
Sent: Thursday, January 05, 2012 11:28 PM
To: Martyn Terpilowski
Subject: Re: FW: FW: FW: Further Question [Client 1]

Martyn,

Please find attached interest payout request forms for my five accounts.  I sincerely hope that all my accounts but one will have been fully paid by the end of February, and, therefore, these forms
would not eventually be necessary.

Thanks
[Client 1]

Martyn Terpilowski

—– Original Message —–
From: “Martyn Terpilowski
To: “‘[Client 1]'”
Subject: RE: FW: FW: FW: Further Question [Client 1]
Date: Sat, 7 Jan 2012 02:35:59 +0900

Ok [Client 1] – I will forward these straight away.

I am still waiting for absolute confirmation on the rates and I am doing
the best I can.

I think from the queue numbers that we have been getting – it will only be the first 2 accounts that pay out in Feb as redemption requests for the other 2 accounts were received later.

I will get confirmation on all of this as soon as possible.

Cheers
Martyn

Client 1

—–Original Message—–
From: [Client 1]
Sent: Saturday, January 07, 2012 11:33 AM
To: Martyn Terpilowski
Subject: Re: RE: FW: FW: FW: Further Question [Client 1]

Martyn,

Thank you for working on the rates.

Regarding the queue, I am finding it a little odd that all my accounts are not moving up the queue at the same pace. Comparing the queue information received in August, the first 2 accounts have not moved up the queue as fast as the other 2 accounts.  This suggests that many of the accounts that were placed in the queue between my first 2 and the other 2 have already been paid.  Could you please try to find out what actually happened.  Below is the queue information I received back in August.

[A########] – Queue position 234
[B########] – Queue position  236
[C########] – Queue position  76
[D########] – no redemption held to date
[E########] – Queue position  95

By the way, when are you coming back to Japan?

Regards,
[Client 1]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Sunday, 8 January 2012 5:31 PM
To: Melanie Gomez; Martin Venier
Cc: ‘[Martyn’s Assistant]’
Subject: FW: RE: FW: FW: FW: Further Question [Client 1]

Melanie

Another mail from [Client 1]. He is analytical and reads everything. He has now highlighted something on the queue numbers. Can you let me know on this?

Thanks
Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Monday, January 09, 2012 10:53 AM
To: ‘Martyn Terpilowski’; Martin Venier
Cc: ‘[Martyn’s Assistant]’
Subject: RE: RE: FW: FW: FW: Further Question [Client 1]

Dear Martyn

Thank you for your e-mail.

I would like you to speak with Martin Venier who has just returned from leave tomorrow at 10.30am Tokyo time to discuss the rate hold and also his questions regarding where his investments sit in the queue.

Please let me know the best number to call you on and if 10.30am Tokyo time is good for you?

I look forward to hearing back from you

Melanie

Melanie Gomez (Peake)

Operations Manager International

One Year Fixed Income with 100% Capital Protection for the first 30%
stock price fall (ASPF3)

AUD : 12.50% pa, EUR: 10.00% pa, GBP: 9.00% pa, USD:9.00% pa

Available until 27 January 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Monday, January 09, 2012 7:09 PM
To: Melanie Gomez; Martin Venier
Cc: ‘[Martyn’s Assistant]’
Subject: RE: RE: FW: FW: FW: Further Question [Client 1]

Thanks Melanie

I am in the UK right now and travelling to Asia tonight. I will actually be in KL at first as have some business there so I will give you a KL number when I get there.

Let me know ASAP on the questions asked.

Rgds
Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Tuesday, 10 January 2012 8:21 AM
To: Martyn Terpilowski
Cc: Martin Venier; [Martyn’s Assistant]
Subject: Re: Further Question [Client 1]

Dear Martyn

This will be covered off in the call.

Martin will leave tomorrow for Tokyo so I hope we will be able to make contact today. Have a safe trip back

Thanks

Mel Gomez

Sent from my iPhone

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Tuesday, January 10, 2012 10:14 AM
To: Martyn Terpilowski
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn

If today is not convenient then please confirm a time on Monday for the call when Martin is back in HK [Hong Kong].

Martin would normally meet with you in Tokyo but he has an extremely busy schedule this time presenting at a number of events.

Many Thanks

Mel

Melanie Gomez (Peake)
Operations Manager International

One Year Fixed Income with 100% Capital Protection for the first 30% stock
price fall (ASPF3)

AUD : 12.50% pa, EUR: 10.00% pa, GBP: 9.00% pa, USD:9.00% pa

Available until 27 January 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 11 January 2012 4:31 PM
To: Melanie Gomez
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

I am now in KL and my number is +#### ### ####.

I cannot really wait until Monday though as the client is very insistent on getting an answer. I do see his point.

Surely an answer on his question on the rates and the queue numbers is pretty straight forward and can be easily dealt with by email?

Please do let me know.

Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Wednesday, January 11, 2012 5:58 PM
To: ‘Martyn Terpilowski’
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn

Thank you for your e-mail.

Unfortunately the answer is not as straight forward as you would imagine.  I will try my best to get back to you tomorrow with a response on this.

I still believe a call next week would be beneficial.

Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

One Year Fixed Income with 100% Capital Protection for the first 30% stock
price fall (ASPF3)

AUD : 12.50% pa, EUR: 10.00% pa, GBP: 9.00% pa, USD:9.00% pa

Available until 27 January 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, January 11, 2012 6:01 PM
To: ‘Melanie Gomez’
Cc: ‘Martin Venier’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

I imagine it probably is not which concerns me further.

Yes – happy to talk to Martin next week, but an answer would be good now.

Martyn

Martyn Terpilowki

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, 12 January 2012 2:52 PM
To: Melanie Gomez
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

[Client 1] is chasing me on this. Please let me know.

Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Thursday, January 12, 2012 6:15 PM
To: ‘Martyn Terpilowski’
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn

Thank you for your email.

As agreed I have been in touch with h/o and management regarding this case and have the answers for you and your clients questions.

1) Rates applied to these investments will not be changed to reflect the original earning rate the investor was receiving when these investments went into a ‘redemption pending’ status. The rate applied is the current rate available at the time of rollover for the original term they selected as
previously explained. All investors have to be treated the same.

Please refer to refer to page 31 of the Information Memorandum under Changes to Terms and Conditions and Distribution Rates, ‘The distribution rates and fees that apply to investors’ investment accounts can change from time to time without notice.’

Please also refer to the disclaimer that is at the bottom of the LM rate sheets (attached).

2) h/o have also provided me with updated queue information for this investors redemptions;

12 January 2012 queue no.

[A########]           128
[B########]           129
[C########]           29
[D########]          redemption request received 30/12/2011
[E########]           30

LM is not normally in the practice of providing where an investment sits within a redemption queue as it does not reflect what is actually happening behind the scenes.  Providing timeframes is also something that we do not like to issue as there are so many factors that can prevent the fund from meeting them. And although we clearly state that it is only for indication purposes, investors do focus on the date given which can lead to further disappointment.

Please confirm a date and time that Martin can call you next week to discuss the above with you further.

I would also like to inform you that as of the 17th February 2012  I will be going on maternity leave. In my absence I will be asking Shauna to look after your enquiries and Martin will still continue to be the Regional Manager for you and [your firm].

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

One Year Fixed Income with 100% Capital Protection for the first 30% stock
price fall (ASPF3)

AUD : 12.50% pa, EUR: 10.00% pa, GBP: 9.00% pa, USD:9.00% pa

Available until 27 January 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Friday, January 13, 2012 11:15 AM
To: ‘Melanie Gomez’
Cc: ‘Martin Venier’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Hi Melanie

The problem is with this, is that [Client 1] was already told by LM that he would get the same rate as he was told that there were ‘no redemption issues’ when he invested the final amount into the MPF. Obviously this seriously concerns him, in relation to what LM says and actually does.

Also, the client has not agreed on the rates and just wants his money back. As he has been waiting a long time, he sees it as very unfair that he cannot get his money, but LM can just reduce the rates. I know we cannot win this argument – but this is the problem I have with LM.

I just do not believe clients would invest new money into the LM funds if they were told the facts which they obviously are not which is worrying.

On the queue – as of Jan 2012 the queue nos are:-

[A########]        Queue no. 128
[B########]        Queue no. 129
[C########]        Queue no. 29
[D########]        Not included on the report as redemption request was only received on 30/12/2011
[E########]        Queue no. 30

In Aug 2011 the queue nos were:-

[A########] – Queue position 234
[B########] – Queue position  236
[C########] – Queue position  76
[D########] – no redemption held to date
[E########] – Queue position  95

It does therefore seem some have moved faster than others, so I do see the clients point. Unfortunately if you are holding clients money when they want it back, they will always want to know this info, whatever is ‘happening behind the scenes’ and the info should be readily available.

I do not want to keep spending time on this but unfortunately LM have mislead clients which has led to this mistrust and general fear from clients whether they will actually get their money back at all.

I am on +#### ####### next week and Martin can get me on that number. Please ask him to call me on Monday or Tuesday.

Rgds
Martyn

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Saturday, January 21, 2012 11:31 AM
To: ‘Melanie Gomez’
Cc: ‘Martin Venier’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

On the queues – please see the mail below:-

It is not feasable that this is just an error if you look at the numbers. This guy is very educated and he just will not buy it. It worries me that, that would be put fwd as a reason for this – if you look at the chronological order of these numbers.

Please take a look and get back to me. The major problem is that we have consistently received inaccuracies at LM which does not give confidence.

I just hope we get some money back ASAP to take the heat off me as this is becoming a full time job for me.

I look fwd to hearing from you.

Also, when will you next be in Tokyo? – it may be an idea to arrange a meeting or even a telecon beforehand with [Client 1], but to be fair these clients are like me and lots does not add up. We know the market conditions, that is not and has never been the issue, with me or the clients.

Please advise.

Martyn

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, January 26, 2012 10:38 PM
To: ‘Melanie Gomez’
Cc: ‘Martin Venier’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Hi Melanie

I know it has been CNY [Chinese New Year] and Australia Day, but has anyone had a chance to have a proper look into this?

And can someone let me know on the next Tokyo visit as below?

Martyn

February 2012

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 1 February 2012 11:12 AM
To: Melanie Gomez
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Or this as this client has been on to me again this mng?

MT

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Wednesday, February 01, 2012 12:20 PM
To: ‘Martyn Terpilowski’
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn

I will forward the email Martin sent through to you last week

Thanks

Mel

Melanie Gomez (Peake)
Operations Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100% Allocation
with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 1 February 2012 11:22 AM
To: Melanie Gomez
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Thanks – I am so sick of this.

Cheers
Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Wednesday, February 01, 2012 12:23 PM
To: ‘Martyn Terpilowski’
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn

We do appreciate the situation both you and your client are in and we are trying to help as much as possible.

Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100% Allocation
with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, February 01, 2012 12:28 PM
To: ‘Melanie Gomez’
Cc: ‘Martin Venier’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Cheers – the queue answer was a bit of nonsense, so that does need answering correctly.

Rgds
Martyn

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 1 February 2012 12:07 PM
To: Melanie Gomez
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Melanie

Here is the latest from [Client 1] (attached). I have also had him on the phone at length this morning and I really do not know what to do. A lot of what he says makes sense and it is hard for me to accept that other clients are not upset also. Please note I have pointed out to him that you are only the messenger and it is not your fault. It does seem for a fact that there were certain lies told by Heather and Shauna which has really added to the distrust. This was my experience also when I was directly told by Shauna and Senior Management that there were no redemption issues with the MPF when we later discovered there was already a queue in place. Whether LM accept that or not, that is very naughty and has led to this client having little faith in what he is being told. I really need this taking to the top and someone commenting properly. If you are selling a fund in the offshore market place to non Austrlian’s it has to be understood, that you can’t just expect everyone to get this as some of it makes no sense and there are many contradictions.

I look fwd to hearing from you soon.

Rgds
Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Wednesday, February 01, 2012 3:21 PM
To: ‘Martyn Terpilowski’
Cc: Martin Venier; [Martyn’s Assistant]; Lisa Darcy; Shauna Larkin
Subject: RE: Further Question [Client 1]

Dear Martyn

Thank you for your email and also the attached document from [Client 1].

Further to your conference call with Martin last week regarding this investor and his investment, Martin is currently working on a update on the fund and the current circumstances.

Both myself and LM does appreciate the situation that all investors are currently in and take all feedback provided seriously.

The information I have provided to you over the last several months regarding the Funds has been factual information provided from various sources and Management has been consulted on numerous occasions regarding this investor and the situation he is in.

We do not expect emails that we send to you to be forwarded directly to the client.  They emails between us are an accurate as possible statement of facts as they are presented to us, and the emails will not express our feelings for your investor’s situation and those of others.  We expect our emails to be edited before they are sent to investors by an advisor.

Martin will be in Japan the week of the 13th February and he has delayed making commitments so as to maximise the chances that he can meet with your client . He would ideally like to meet with yourself and the client to discuss this further and give the investor the opportunity to express
his feelings and ongoing concerns. Please could you confirm a suitable day, time and venue for where you would like this meeting to be held.

Please note I have copied in Lisa Darcy (Executive Director) in on this email too.

I would also like let you know that I will be on maternity leave as of the 20th February 2012 and as of the 17th you and your clients will be looked after by Martin and Shauna. I will start copying Shauna in on all communications so that she is fully aware of what is going on.

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100%
Allocation with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 1 February 2012 2:54 PM
To: Melanie Gomez
Cc: Martin Venier; [Martyn’s Assistant]; Lisa Darcy; Shauna Larkin
Subject: RE: Further Question [Client 1]

Firstly – do not worry. I certainly edit emails from you, before the clients get it. I know how to deal with clients, but I have to give the ‘facts’ that you give me. It is only fair and I do not know what else to do now.

I will be in HK at that time unfortunately and will not be back in Japan for some time, but I could still organise such a meeting.

Rgds
Martyn

Martin Venier

—–Original Message—–
From: Martin Venier
Sent: Wednesday, February 01, 2012 4:06 PM
To: ‘Martyn Terpilowski’
Cc: [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn,

Feel free to organise such a meeting.

My preference is for the Thursday afternoon the 16th of February.

Are you free to meet with me in HK next week?

Kind regards,
Martin

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, 1 February 2012 3:11 PM
To: Martin Venier
Cc: [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Hi,

I can meet you in HK the week beginning the 13th, later in that week, should be fine. Please let me know.

I will ask the client if this works for a meeting.

Martyn

Martin Venier

—–Original Message—–
From: Martin Venier
Sent: Wednesday, February 01, 2012 4:15 PM
To: ‘Martyn Terpilowski’
Cc: [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn,

I see. I will be back in HK on the 17th.  I will probably not be able to meet until about 4pm if you are still in HK?

Alternatively, I could arrive a little earlier in Tokyo and meet with you on the Sunday afternoon, if you have not flown to HK yet.

If you fly to HK on the w/e [weekend], I can fly to Tokyo a later on the Sunday and meet with you beforehand in HK.

Hopefully we can work out a way to connect.

Kind regards,
Martin

Martyn Terpilowski

On 1 Feb 2012, at 15:18, “Martyn Terpilowski” wrote:

I will not be in Tokyo at all until April. Why don’t we meet the week after then when we are both in HK. Lets see what the client says fist re the meeting..

MT

Martin Venier

—–Original Message—–
From: Martin Venier
Sent: Wednesday, February 01, 2012 4:23 PM
To: Martyn Terpilowski
Subject: Re: Further Question [Client 1]

Ok kr, Martin.

Sent from my iPhone

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, February 02, 2012 11:54 AM
To: ‘Martin Venier’
Cc: ‘Melanie Gomez’; ‘[Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Unfortunately the client will be overseas when you are in Japan, so it will not be possible to set up a meeting. He still wants a response on his comment sheet yesterday though as he still thinks that he is not getting clear information.

I will meet you the week beginning the 20th and set something up earlier that week when we are both in HK.

I look fwd to hearing from you soon.

Rgds
Martyn

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, February 02, 2012 12:11 PM
To: ‘Martin Venier’
Cc: ‘Melanie Gomez’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

This bounced to both LM addresses when I sent before. Please confirm receipt.

MT

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, February 02, 2012 1:27 PM
To: ‘Martin Venier’
Cc: ‘Melanie Gomez’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Trying again…

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, February 02, 2012 2:08 PM
To: ‘Martin Venier’
Cc: ‘Melanie Gomez’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

[and trying again…]

Martyn’s Assistant

—–Original Message—–
From: [Martyn’s Assistant]
Sent: Thursday, 2 February 2012 1:45 PM
To: Melanie Gomez
Cc: Martin Venier; ‘Martyn Terpilowski’
Subject: FW: Further Question [Client 1]

Hi Melanie,

As mentioned in my previous email; please see the email [above] from Martyn.

He has been trying to send this to both you and Martin since this morning but he keeps getting bounce backs.

As suggested please check if there is an email black list particular for emails going to yours and Martin’s account and whether he is on that list.

[Martyn’s Assistant]

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Thursday, February 02, 2012 3:25 PM
To: [Martyn’s Assistant]
Cc: Martin Venier; ‘Martyn Terpilowski’
Subject: RE: Further Question [Client 1]

Dear [Martyn’s Assistant]

Thank you for sending this through.

Martyn,

Can you please confirm which of the comments you are referring to as there were a number on there that have already been answered previously and evidence provided regarding rates etc.

If you would like me to answer each one individually again then please let me know and I will be more than happy to summarise everything.

Martin will be providing another update as requested in your conference call last week but he is extremely busy at the moment which is why there is a delay in getting this to you.

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100% Allocation
with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, 2 February 2012 2:39 PM
To: Melanie Gomez; [Martyn’s Assistant]
Cc: Martin Venier
Subject: RE: Further Question [Client 1]

He needs to know about the queue as in my email of last week as it makes no sense whatsover what they have said.

In general he is very unsatisfied with answers given previously.

[Assistant,] please fwd this…as they will not get it as I have been ‘blacklisted’ on these 2 accounts.

MT

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Thursday, February 02, 2012 3:50 PM
To: ‘Martyn Terpilowski; [Martyn’s Assistant]
Cc: Martin Venier
Subject: RE: Further Question [Client 1]

Dear Martyn

I have just received your email direct. You have not been blacklisted.

I will go through the questions/ comments again and answer them according to the information I have available.  If this is still not satisfactory and the outcome is not accepted then how would you like to proceed? Would your client be interested in a conference call with Lisa Darcy?

As I mentioned in my email yesterday and previous correspondence management has been consulted on numerous occasions regarding this investor and the outcome with regards to rates etc.

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100% Allocation
with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, 2 February 2012 3:11 PM
To: Melanie Gomez; [Martyn’s Assistant]
Cc: Martin Venier
Subject: RE: Further Question [Client 1]

Ok – good. Whatever happened it was only the 2 of you who could not get from me which is weird, but does not matter now.

I can try to set up a conf call yes. He is never going to be happy as LM have changed their policy so many times and have mislead clients. These people (and me) are not stupid and keep records. The answers that we get from LM are just not of the calibre of an international investment company
and it is clear that you guys are used to dealing with Australians only, who seem to accept the answers. You can’t just say the queue was a mistake – it is obvious if u look at the chronilogical order it was not. You can’t just say u do not give this info when u holding clients money which they want back? It is just madness and any high level international investor would pick up on this. The client has clearly outlined everything clearly and you cannot tell him sorry we messed up a few times and told you the wrong stuff, but eh it will be ok. I find it baffling but everyone at LM seems to think this is acceptable, including the very top people who were the first people to mislead me, so I have no idea what to do. A serious answer on how it got to be that it appears that some people were added to the queue in the middle of [Client 1’s] different requests, has got to be answered better. I sent a very clear email highlighting last week, how the answer we received cannot be true. I am sure you are sick of this and I certainly am, but really some of the answers are not acceptable and this one is the top of the queue.

Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez
Sent: Thursday, February 02, 2012 4:20 PM
To: ‘Martyn Terpilowski; [Martyn’s Assistant]
Cc: Martin Venier
Subject: RE: Further Question [Client 1]

Dear Martyn

Thank you once again for your email and comments.

Please let me prepare the answers to your clients comments and questions.

I am happy to arrange a conference call with Management but if you do feel that this is not going to beneficial and the answers we are providing are not genuine/ believable then I would recommend that your client sends a formal complaint to ASIC [Australian Securities and Investments Commission].

I will be in touch shortly

Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100% Allocation
with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Thursday, February 02, 2012 4:51 PM
To: ‘Melanie Gomez’; [Martyn’s Assistant]
Cc: ‘Martin Venier’
Subject: RE: Further Question [Client 1]

Unfortunately the queue comments make no sense and the client knows that and I have read it many times and that needs explaining honestly.

I put this very clearly in an email last week about ‘chronological order’. Otherwise they were previously being made up, to keep the client quiet which is ridiculous. This is not complicated and needs answering… It is smoke and mirrors to talk about what is going on behind the scenes as he
understands the potential issues, but wants to know why the queue seems to have changed. Please go back to that email. I am sure if your money was invested, you would agree.

I do think there is potential for a complaint – but as always I am sure they do not cover the offshore business.. I think a proper answer on why these no’s in the queue have changed would be a good start. That is not complicated and the answer of it just being a mistake (as there have been so
many) is just not believable.

I can prove in previous mails that the information on the original ‘gateing’ of this fund was originally not conferred to brokers as LM tried desperately to get more money in. When questioned on this Peter quoted Richard Nixon and said ‘sometimes it is better to lie for the greater good’. I have witnesses to this and it is scary. It is meglomania and worries me deeply. It seems LM think that clients should just trust them when some info is just clearly incorrect. If we go back to this original situation over 2 yrs ago, it is no wonder we are worried. LM mailed us at that time to offer higher rates for people who extended their term, even though it was not their rollover time. This seemed bizare in the economy so we asked many times, does this mean you need the money as have an issue with redemptions? We were told ‘absolutely not’ by senior management. [Client 1] invested more based on this. We later found out this was a ‘lie’ – there was already queue sytem in place when your bosses said categoricaly there was not. Now can you see where the mistrust comes from? I was a big sponser of LM, but it is not run like an international investment company and scares me and the client. I have said this time and time again, but people act like I am out of order bringing such issues up, but we have been lied to and time again and have even been told it is for our own good. That makes things not believable. I am sick of explaining this.

I just want an answer on the queue and I will deal with the rest. I am deeply worried due to everything that has happened here.

Martyn

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Friday, 3 February 2012 9:44 AM
To: Martin Venier; Melanie Gomez
Cc: ‘[Martyn’s Assistant]’
Subject: My Clients in MPF (not [Client 1])

Good morning

Last night I thought long and hard about this and to be honest it affected me sleeping. I think the right thing for me to do is put redemption requests in for all my MPF clients. Whilst I do not wish to panic them and I will not, right now clients could be waiting 3 or 4yrs for their money back from when they actually request it, so I believe it is best to get the redemption requests logged and they can get in this queue which seems to be very long. Whilst I regret having to do this, I see no choice. If waiting lists are 2 yrs plus it is gated, however much we seem to be told it is not, which again baffles me. At the very worst my clients should lodge income requests so they are getting money paid out and are not simply getting tied up in this without any reasonable explanation of when they may get their money back. For nearly 3 yrs since these issues started, there appears to have been little progress on moving this forward and to be honest I am sick with legacy issues as I am sure you are sick of dealing with me. I will not aim to panic the clients, but think it is best to get things lodged. If things do improve, they can always leave the money in anyway. I still do not understand how you can take money in from new clients, when not paying it out. Sorry I am not Australian, but I have a Masters degree in Economics and have worked at International Companies as have many of my clients and we do not understand that. There have been promises that things would normalise, but it is just not happening, in fact we are seeing no real progress with getting people there money back, when they want it. There are lots of papers giving updates about sales etc, but there must be liquidity in the fund from money coming in, which again confuses. If the queue was 6-12mths, I could deal with it, but it is over 2 yrs on what is/was essentially a one year product. It is continued to be sold by many brokers as a 1 year investment and money is flowing in. I am just not at all comfortable with it and would never advise clients to put money in a gated fund.

Anyway – my views are clear and are not irrational. It is not personal with either of you and I am happy to meet Martin in a few weeks time in HK to discuss, but I am not happy one iota with the current situation or the answers from the top management.

So to be 100% sure I have the right documents, can you please send me the redemption request form for MPF (all currencies) and also the request for income documents that the client needs to complete? Can the client just complete one form and list all accounts on it?  As I said I will not panic clients and I will talk to Martin in a few weeks, but at least this way I am getting the ball rolling and not just waiting for the client to say they want their money back and then telling them they will have to wait 3 or 4 yrs – that would be wrong and these people are my long term clients and friends. Sorry – I can’t just go along with this. It does not seem right.

I look fwd to hearing from you soon.

Have a good day.

Rgds

Martyn

Melanie Gomez

On 3 Feb 2012, at 10:43, “Melanie Gomez” <mgomez@lmaustralia.com> wrote:

Dear Martyn

Thank you for your email. As I am heavily pregnant at this moment in time I can understand/ sympathize with you regarding sleepless nights.

Your feedback is taken seriously, we do understand and appreciate how you and your client about the current circumstances.

I am conscious that it is taking us a while to get back you with answers to your client’s questions and concerns. I know this is causing more unwanted stress and upset. This has not been intentional but I feel that if you could please minimize the number of emails you send through on a daily basis then we can spend the valuable time we need to in answering and collating the relevant information.

As of COB [close of business] today I will no longer be handling your enquiries. Going forward could you please contact Martin Venier direct.

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM Investment Management International Ltd
Suite 3807 – 3808, 38/F Two International Finance Centre
No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martin Venier

From: Martin Venier
Sent: Friday, February 03, 2012 12:08 PM
To: Melanie Gomez
Cc: Martyn Terpilowski; [Martyn’s Assistant]
Subject: Re: My Clients in MPF (not [Client 1])

Thanks Melanie for your assistance. Please liaise with me from here. I will call you to arrange a time to meet with you and your client. I can be flexible so please let me know a suitable time. It will be productive to sit down face to face to review the MPF face to face  – we can review the terms and conditions your client agreed to and put it in the context of their situation. I look forward to a suggested time and date.  It would be handy to suggest more than one time. I  generally in meetings or training advisors and will respond to emails with a 24 hour timeframe in general. Kr, Martin.

Sent from my iPhone

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Friday, 3 February 2012 12:03 PM
To: Martin Venier; Melanie Gomez
Cc: ‘[Martyn’s Assistant]’
Subject: RE: My Clients in MPF (not [Client 1])

Thanks Martin

My client is not available to meet as discussed, so I will meet you in HK in the week beginning 20th. I think it is best that anyway, the client will not accept a lot of excuses. He has been mislead and that is a fact. His last money was added at a time when clients were already in a queue, we were told categorically there was no problem with redemptions. It was lie and the lie was later defended by the CEO as I have mentioned. The increase of rates and rolling people over on their non-rollover dates was all at attempt to mask these problems and would appear very desperate. This is where things started to go very wrong with me and LM. It is not complicated why the client or myself would be angry.

I can meet anytime that week, so just let me know.

I still need clarification on the queue no and LM WMIF [Whole Mortgage Income Fund] as per the other emails, but will wait until next week.

Have a good one…

Rgds

Martyn

Martin Venier

From: Martin Venier
Sent: Friday, February 03, 2012 3:13 PM
To: ‘Martyn Terpilowski
Cc: ‘[Martyn’s Assistant]’
Subject: RE: My Clients in MPF (not [Client 1])

Dear Martyn,

Thank you for your suggestion.

Can I suggest Tuesday the 21st of February at 10.30am.

You are welcome at our office (address below) or we can meet at another location if it is suitable for you.

With respect to the MPF queue, the HKL office has a policy of not providing queue dates or estimates of MPF redemptions for the simple reason that we cannot predict many of the variables and estimates somehow become fixed in investor’s minds as hard numbers.

While we are reluctant to break the terms and conditions that an investor agrees to when they invest in MPF and AIFCP [Currency Protected Australian Income Fund], as it is a risk management design feature due to the nature of the underlying assets (as stipulated in the IM), we do make exceptions when a genuine hardship can be demonstrated.  We sometimes use the Australian Securities and Investments Commission (ASIC) criteria for such cases.  I had a recent case where an investor jumped the queue because they have cancer and have to liquidate all their investments to pay for the operations.  They provided the supporting evidence and were able to be paid.  There are such cases that cause changes in queue numbers.

We look forward to processing your redemption requests and to meeting you when you are in HK.

Kind regards,

Martin Venier
Regional Manager International

LM’s Latest Product Offerings:

1) 5.5 Year Term = 100% Capital Protection (S&P/ ASX200) 100% Allocation with 60% Growth Potential

2) 1 Year Term = Fixed Rate Income with Capital Protection

ACT NOW: Available until 30 March 2012!

LM Investment Management International Ltd
Suite 3807 – 3808, 38/F Two International Finance Centre
No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9226 0708
Fax: +852 2530 1076
Email: mvenier@lmaustralia.com
Skype: martin.venierlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Friday, February 03, 2012 6:06 PM
To: ‘Martin Venier’
Cc: ‘[Martyn’s Assistant]’
Subject: RE: My Clients in MPF (not [Client 1])

Martin

This time sounds fine. I can come to your office.

You cannot come out with a policy like this now. It is more misinformation and breeds more anger and mistrust. He is calling you for errors in this list and you are coming out saying we are not giving that information anymore… He understands there are factors and he is not looking for exact dates, but he wants to know this is moving in the right direction and that can be shown easily by the queue coming down, unless this has just been another lie to appease this client. The client has been waiting for his money for 2 yrs and you come out with this rubbish. He also invested further money because of lies by LM. You cannot do this, all your credibility goes. It is clear nonsense and lies. You really need to retreat to Austrlia where this is all acceptable, as it is not in the real world. Period.

I am sorry no way is that good enough – it just highlights more lies and completely makes me think we have real issues here.

I understand your hardship things – but this client gave his last money under false pretences and has repeatedly been lied to. He could have taken LM to the cleaners in Japan.

We have it all in black and white – I do not know who you think you are dealing with, but you must think we are idiots. Everything about it is just mad.

It is Friday night so I should calm down, but really you need to do better on this and think about this sensibly. We are not in Australia and we have reason not to trust anything LM tells us, therefore we expect better and I look fwd to getting it soon.

See you on the 21st.

Rgds

Martyn

Melanie Gomez

—–Original Message—–
From: Melanie Gomez [mgomez@lmaustralia.com]
Sent: Friday, February 03, 2012 7:28 PM
To: ‘Martyn Terpilowski’
Cc: Martin Venier; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Dear Martyn

As agreed I have viewed the letter dated 31 January 2012 from Mr [Client 1] again and do not wish to dwell on some of the statements/ comments he has made but focus on the facts.

Rates;

All investments in the Managed Performance Fund which have a redemption logged has to be ‘rolled over’. This is a term that LM uses and although your client has not requested this it is something that has to happen behind the scenes in our systems to ensure the investment continues to earn interest. It’s internal terminology. Until LM can confirm when payments will be made then LM rolls investments over for the same term as they originally invested for to ensure they get the appropriate rate allocated to the investment.

I believe when Heather was handling this enquiry LM had agreed at that time to hold the rate for investors who had requested a redemption until the funds were released. The fund does not make any explicit or implicit guarantees with respect to rates or capital, and it can only generate a
return based on what the fund’s assets earn. Interest rates in Australia have fallen and that has flown onto the rate of return of the assets in the fund. What we are paying reflects the capacity of what the fund is earning right now.

For all investors in the fund regardless of their initial investment term is subject to a rate change every 12 months of their investment. So if an investor has selected a 3 year term then they will get the current 3 year rate for the first 12 months and then the rate applied for the next 12
months will be the current 3 year rate at that time. However, LM is able to adjust rates at any time during an investment term if it is in the best interest of the fund. I have provided evidence previously of where this can be located in the Managed Performance Information Memorandum and this is applicable to all investors regardless of whether they are new investors, existing investor without a redemption logged and investors who have logged redemptions.

As advised in previous communication management was consulted regarding the rate applied to this investment and it was management’s decision that no adjustment to [Client 1’s] was applied regardless of what had been agreed previously.

I have mentioned to you that direct investors in the fund will shortly be moving to a rolled up unit price. This was originally scheduled for February but has been delayed.  When this happens the investment will be given additional units to ensure that they will still get the current 12 month
rate until they have reached the end of the investments 12 month term. At the end of the 12 month term the current unit price/ rate on that day will be applied to the investment for an investment term of 12 months, and going forward the rate of return/ unit price can change throughout the remaining time they are invested.

Queue;

I have seen the email that Martin sent through earlier this afternoon regarding [Client 1’s] concerns on the queue.  As explained in Martin’s email some investors have had their redemptions paid out sooner than other investors due to their personal circumstances. Whether a payment is prioritised or not is again approved by management and an investor needs to provide supporting documentation to justify their case. LM uses the guidelines set out by ASIC to approve these ‘hardship’ requests.

With regards to timeframes, queue numbers and how many investors are currently waiting to be paid – Martin will cover this off or discuss this further when you meet.

Communication;

LM does issue regular updates on all of its funds to both investors and advisers. These communications come directly from h/o and the next one issued on the MPF is going to be more detailed. I can’t confirm a date as to when this will be issued but Martin will ensure that you receive a copy as soon as this is available. The Hong Kong Office works closely with our clients to ensure that they are updated regularly on the current conditions and are happy to meet with both investors and advisers to help them understand what is happening and why.

Many Thanks

Melanie

Melanie Gomez (Peake)
Operations Manager International

LM Investment Management International Ltd Suite 3807 – 3808, 38/F Two
International Finance Centre No. 8 Finance Street, Central, Hong Kong
Phone: +852 2501 0262
Mobile: +852 9163 7910
Fax: +852 2530 1076
Email: mgomez@LMaustralia.com
Skype: melanie.gomezlm
Visit Our Website: www.LMaustralia.com

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 04 February 2012 12:31
To: ‘Melanie Gomez’
Cc: ‘Martin Venier’; [Martyn’s Assistant]
Subject: RE: Further Question [Client 1]

Melanie

I actually thought you were no longer responding to my emails, but thank you. I understand what you saying about rates etc, but you are keeping the money against the clients will and the last money was received through a direct lie. I have this in black and white and can prove this, so I think
you should all understaand why this client is deeply upset as I am. We get regular updates on the fund yes, but that does not help this client and is more justification than anything else.

LM’s decision to continue to take money in when a fund has a waiting list of over 2 yrs , through paying brokers good commissions and effectively knowing that the clients are being mislead on the length of term, is what is disgusting here and makes LM very different to any other investment company we deal with. The fact that the CEO and other board memebers have told absolute lies is what worries me deeply about LM. The blind support of employees makes it seem a cult like organisation, where everything seems to be based on trusting Peter and understanding what Austrlian’s do. LM are trying to be an international market without acting like other international
funds. In my whole career in Asia and the UK I have never come across such absolute ridiculous excuses as I come across from LM.

I accept that LM will just be chopping and changing their rules and rates and keep the clients money as long as they can, whilst bringing more money in. I can’t wait to sit at a whiteboard and explain to Martin why this is incorrect and unethical and why I know 100% of clients who actually know the
fund is actually gated would not invest. It is just factual and arguing against that is just frankly ridiculous. I struggle to believe I am talking to investment professionals who do not understand what is wrong with that, but it seems to me that in Australia everything is different. You mention to
any other fund manager and they are just shocked and straight away are concerned. From all I have heard at LM everyone is surprised that I have an issue with this, but any respectable honest broker would. There are not many obviously and hence LM’s probable dislike for me, but my clients are more important to me than to care about that. I have repeated and repeated and repeated my issues on the lies and that is why I always have to respond to you as no one seems to grasp how serious some of this is. As I said it really is like a cult and very worrying indeed.

With relation to queues – this is smoke and mirrors. As I said to Martin yesterday, you have been giving numbers until now and as he has called you on another accuracy, so you think you can stop giving him a number and start quoting completely different info that we never heard before. You have had this clients money against his will for over 2 yrs and it is sheer arrogance to think you can turn round at this stage and say that.

It is best to get all my clients in what effectively could be a non-existent queue straight away. I mean why should we trust LM? The CEO lied to me, the Fund Manager lied to me, sales staff have repeatedly lied to me.

I was a big sponser of LM but for the last 2 yrs I have found correspondence absolutely amazing. I have all the lies in black and white, particularly the original one to get all the clients rolled over and extra money in, when there was redemption issues already. I mean how wrong is that? You think I
am making it up? You think I am irrational?

I will see Martin in a few weeks and I need something better about queues, you cannot keep on uturning as if you have no accountability to anyone.

I need to find out from the HK regulator on this as I can prove a lot of lies been told and I know they are strict. LM cannot get away with this. It is rank amaturish at best and corrupt at worse.

I can’t help replying long emails when I get rubbish like this. Look back to the reasons this client is originally upset which I have told you 100 times. Then look at who he is – A [wealthy doctor]. He is never going to buy any of this and keeps records as I do.  The whole thing is beyond me that you actually think, you can actually scrap the queues at this stage. Clients have no idea if they will ever get their money back. Sadly my clients do not have financial hardship as they are high networth clients and people you guys certainly should not be dealing with, coming back with this. I know
someone else who is not my client who has money in MPF who told me on Weds, he has been told something completely different regarding when he will get his money back. He is high networth again. You see all these non-Austrlian, highly educated people can see through this and I strongly fear for clients money to be honest. Nothing has changed in 2 yrs except the lies and cover have become worse. These regular updates are just to cover your obiligations in Australia, but do not help the clients and nothing changes.

I am absolutely flabbergast by the whole thing and deal with lots of different funds, but they are dealt with far better and by people who understand the above is all wrong.

I look fwd to a serious anwer on the queues that I can go back to the client with. Your latest uturn is not that. Forget about the rest, as we are getting no where there and everything I hear worries me more as it seems that LM seem to think lying for ‘their’ greater good is all ok.

Very disappointing.

I look fwd to hearing a concise answer just on the queue and I will not let my anger boil over anymore. Do not worry I will not fwd this email to [Client 1] – it is an insult to the good man’s intelligence. It is actually an insult to mine.

Have a good weekend.

Martyn

March 2012

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Friday, March 16, 2012 12:46 PM
To: ‘Martin Venier’
Subject: RE: How did that go then?

Thanks for the call this mng. I look fwd to hearing from you again soon with some better news for [Client 1].

Martyn

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Tuesday, March 20, 2012 9:48 AM
To: ‘Martin Venier’
Subject: RE: How did that go then?

Any news from [Client 1] on this yet? Also, surely some of the money is available now as it was about this time he was told. I know u can’t gtee etc, but surely some must be available. I was thinking about this at the weekend and I know I am wasting my breath as you seem to think LM’s actions are normal, but it is not. You keep telling me you have run a fund, but then you tell clients that some file mix up must have been the reason for misinformation and numbers coming from the wrong place. None of it makes real sense and I have just never heard anything like it from any other investment company. Also, no one really gets mixed up between MPF and MIF who is invested, clients are not stupid (or mine aren’t) in the way you try to pass off these mistakes. I talked to a very good friend on this who I respect and they totally agree. Talking to anyone at LM is so hard, as the stuff they come out with is just unbelievable when you sit back and think about it. It is just rubbish excuses. Reality is 1) you are taking money in for a fund that is effectively closed (2 yr waiting list means closed). 2) Most clients investing are not aware of this and in reality you know that (I can prove that easily). 3) The rules regarding money coming back etc change all the time and the excuses are pretty laughable (files confused, new systems etc).. Sorry but this is not an international investment company and if you really ran a fund, you would know that this is all very wrong. I have thought long and hard about this and I am sorry I am not a stupid commission hungry broker like 90% of them, and over the last 3 yrs it has been one shocking revelation after another and trust has ebbed away completely. No educated person could have listened to LM for the last 3 yrs and have anything but fear.

Australia has been relatively unscathed until now, but I do believe at some point there will be a correction in property values and then we will probably have real problems.

Very worried.

Martyn

Martin Venier

From: Martin Venier
Sent: Tuesday, March 20, 2012 12:25 PM
To: Martyn Terpilowski
Subject: Re: How did that go then?

Dear Martyn, I am away today at an LM introducer day. We are due to discuss your matter tomorrow.  In the meantime I await The emails from the investor. I will call you by Thursday morning at the latest. Kr, Martin

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Tuesday, March 20, 2012 12:37 PM
To: ‘Martin Venier’
Subject: RE: How did that go then?

Thank you Martin. I am just totally disillusioned with this and this industry. To me it is a disgrace that people are continuing to put money in MPF and they clearly are. it is purely about the commission not the client.. It is just so wrong and the reason the offshore mkt place is treated suspiciously by people in the know…

I am 100% sure though that something is wrong. There is no way that these are all simple mistakes, unless the people in control are not fit to run a company which I certainly suspect is the case. I do not like to be like this, but I have reviewed everything at length and it makes no sense…. None of it and I know this business more than most and talk to real fund managers often. They also agree with me.

Rgds

Martyn

April 2012

Martin Venier

—–Original Message—–
From: Martin Venier
Sent: Wednesday, April 11, 2012 10:49 AM
To: ‘Martyn Terpilowski’
Subject: RE: Letter to Martin 4-10-2012

Dear Martyn,

Yes, I can see the investment characteristics of MPF are causing you stress.

Would you like to stay listed as [Client 1’s] advisor or do you just mean for the purpose of this meeting?

We can’t guarantee an outcome for [Client 1] as the fund is operating within its investment guidelines but I will definitely do my best to get some form of return earlier than is contracted based on the clients misunderstanding of the terms and conditions of the fund.

In our meeting I will try and determine what level of funds he really needs or if he is looking for assurance.

While it’s not a factor in my control, I would like to explore the possibility of a partial redemption.

For the record the fund is running in perfectly fine shape – it has not had a unit price reduction since inception in 2001 and it has achieved above cash returns as per the fund’s stated investment objectives.

The underlying assets remain property development of 3 to 5 years and it is reasonable for the underlying investments in the fund can converge towards the duration of the underlying assets under some conditions – a perfectly normal characteristic of a property development related fund.

The challenge is when investors and/or introducers confuse the fund with a bank term deposit.

I am not sure how that can happen given that MPF is a fund and not a bank, the terms and conditions clearly state the risks, including time risk, and the rate of return of the investment is higher than a bank term deposit. Basic financial principles would dictate that a fund that offers term
deposit conditions would offer term deposit rates of return.

Please let me know the level of involvement you would like with [Client 1]?

Kind regards,
Martin

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, April 11, 2012 11:10 AM
To: ‘Martin Venier’
Subject: RE: Letter to Martin 4-10-2012

Just for the meeting, of course. I am responsible for this – sadly and want to stay listed as his adviser. I want to help him, but cannot do anything in relation to this meeting and it just frustrates me…

Please spare me – the ‘fund in great shape’ comments, when money is tied up for yrs. The unit price does not matter if you cannot see or get the money. We don’t know the reality at all.. Please discuss this with another real ‘fund manager’ for their comments on that as mine have been exhausted, but
comments like that are just ridiculous. None of my clients have confused it with bank deposits and once again this is just inaccuracies. The trouble with LM is that they lied when they first had redemption issues and your comments below irritate those people who have been connected to the fund since 2001 and know the reality. You can say what you like about your training sessions now, I understand it and your continued explanations of this being perfectly normal etc, worry me to be honest. It is incredibly frustrating talking like this and when I talk to other educated people, they
think exactly the same. It appears that LM have no intention of returning this fund to the normality that existed for so long.

It just makes no sense when you are taking money in and not paying it out again, you are the ONLY fund doing this – so please give me some credit. You are best to come out with these lines to sales orientated, commission hungry people who sell this and they may believe you it is ok, but that is not me. I actually do not think you believe this 100% and could not do really. I have before likened LM to a cult, where people avoid the reality of the situation and say things that are truly ridiculous in the wider world, but it seems the norm and I am used to it now, but no fund manager etc agrees
when I query this with them.. They all say I should be very concerned, especially with the complete denial and rhetoric used.

I just get more of the same ridiculous semantics from LM who clearly forget who they are talking to. Like the list that disappeared when you upgraded your system and then someone using the wrong numbers for the list… sounds normal to you???? Really?

Please let me know how you get on with the client. If you have so much money going in, you should have some money to pay out, so just do it and then I can be rid of this situation and you can be rid of me.

You have been selling stuff for yrs – nothing ever happens.. It is all very worrying..

Martyn

Client 1

—–Original Message—–
From: [Client 1]
Sent: Wednesday, April 11, 2012 7:38 PM
To: Martyn Terpilowski
Subject: LM

Martyn,

I am very frustrated,  The explanations I was given during the meeting with Martin were

1.)  There was no guarantee that the money was to be paid within the stated time frame.
2.)  I should have known that the investment was meant for long term.
3.)  Past performance is no guarantee for future performance.

Why have all the investors in Magellan been paid while I am not?

Regards,
[Client 1]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, April 11, 2012 9:13 PM
To: ‘Martin Venier’
Cc: ‘Peter Drake’
Subject: FW: LM

Martin

Please see email [above] from client. This whole situation is absolutely ridiulous and I am sick of it. The client should go to a lawyer in Japan where you are not even a registered fund. The responses we get from you are a disgrace. Thank you for ringing me with more bad news before, but things just go from bad to worse, whilst you take money in and pay nothing out. I have not had one explanation from you which I trust and the stuff about Melanie using the wrong file for the queue numbers (which suddenly disapeared) and clients not seeing this as bank deposits is just rubbish. It is criminal to be honest. If you take money in, how can there be a 2 year waiting list to get money out? I have heard every excuse under the sun, but someone needs to go legal as LM are cowboys in the extreme. If you used to run a fund as you claim you would know this, but I am not sure what truth there is behind what any of you guys say anymore as I have never come across a fund who act like LM. There just cannot be a happy ending to all this which is tragic, as nothing you ever says makes sense to educated people, whether you are Australian or not mate. That is a fact. The fact that the Life Offices still take your business is disgusting as is the fact anyone sells this fund, when there is just no idea whatsoever when people will get their money back. You are talking rubbish Martin, if you are telling me people invest knowing there is absolutely no end time frame of when they will get their money back. You can hide behind semantics as much as you want, but this is the reality. It is sold for commission and the money going in, is now just keeping up the house of cards. It is shameful.

Rgds
Martyn

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: 28 April 2012 10:05
To: ‘Martin Venier’
Cc: ‘Peter Drake’
Subject: RE: LM

Martin

Any news on [Client 1’s] money? I know you reckon there is no list anymore as it was lost in a computer system error and young girls in the office were using the wrong files for the queue numbers for their clients to get their money back, but my client is still no closer after 2 yrs to getting any money back, whilst you continue to take money in and expand. That is WRONG

and that is a FACT before you start saying you were a fund manager. I tell you what I will do, I will get a group of real fund managers in different asset classes who understand gating and the way it should be dealt with and we can all sit down together. This is illegal in many countries (Taking
money in and not paying out) as I am sure you really know.

We have been given potential dates of Feb, March, April and we are nearly in May for this money. You are always selling assets, but no one gets any money and the only people who could possibly support this are commission hungry brokers.

It is disgusting. It is about time you just paid this guy out and my other clients also and I will go away, but until then I am not just going to stand by whilst you do this.

Have a great weekend and have a think what you are actually doing and don’t come out with the silly comments about understanding the asset class or being Australian. I get it and so does everyone else I discuss this with. The issue is not that, it is the obvious not disclosure of most information when this is sold now and the fact that you will not even give an indication
of when a client might get his money back as you expand into the UK and take more money off these poor people.

To be honest I can live with that as I will not be doing anymore LM business, but for the poor clients I signed up years ago, this has become a nightmare. The whole stable unit price thing is worrying also, I am sure that will drop before clients get any money back as with MIF – it is all very tragic, but you are expanding which is amazing.

Seriously…..

Please just get the money to my client, so I do not have to listen to the lies and you don’t have to listen to me.

As I said the fund is not registered in Japan for example and I am not sure about HK, but will find out. If it’s not, even in a wrapper it should not be marketed. I have sat down with the SFC this week and I know the situation.

Please – just do the right thing. I was a big supporter of LM, but my client’s treatment has been appalling and I am 100% sure it is morally wrong, if not illegal.

Rgds

Martyn

Martyn Terpilowski

On 29 Apr, 2012, at 11:38 AM, “Martyn Terpilowski” wrote:

Hello Martin

Forget Australia – are u regulated in HK by SFC? Simple question, I know you don’t take direct business but I need to know this as this has gone on too long and as you selling in HK and Japan – it does matter what the rules in Australia. I have had legal opinion on that, so please just let me know Martin. This has gone on too long unfortunately, and the only thing we ever know is things will change and we will never get a straight answer, so please confirm or deny my question. Of course – I could to the SFC to find out but this is easier, so please oblige.

Rgds

Martyn

Martin Venier

From: Martin Venier [mvenier@lmaustralia.com]
Sent: Sunday, April 29, 2012 2:18 PM
To: Martyn Terpilowski
Subject: Re: simple question

Dear Martyn, please refer to www.lmaustralia.com and www.asic.gov.au, plus previous emails, including ones that have the links, numbers and email addresses for complaints with the relevant authorities. If you can’t find the emails I can resend tomorrow  kr, Martin

Sent from my iPhone

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Sunday, April 29, 2012 2:31 PM
To: ‘Martin Venier’
Subject: RE: simple question

It is the sales of unregulated funds here and Japan I am interested in Martin. If you are selling to domestic overseas, you go by the law in that country. I am sure you are aware of that. There are special rules on non registered funds here and certainly Japan, which I am getting an opinion on, because as far as I can you can do what you want in Australia and you all seem to understand this perfectly, but this is just a massively missold product which takes money in with no indication whatever when it might come out again. That is illegal in many places and I am looking into whether it is here. Even though you are selling through PB’s [portfolio bonds], the marketing etc of these funds is covered by the legislation and it appears LM have got no intention of giving my client his money back or even a time frame, whilst they market for more money and that has to be stopped. The people who have this fund and who are in the know, all expect a unit write down also at some point like MIF. It is criminal.

Rgds

Martyn

May 2012

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 30 May 2012 13:07
To: ‘Martin Venier’
Cc: ‘Peter Drake’
Subject: well you have finally made the SMH and it is not just me anymore outraged
Importance: High 

http://www.smh.com.au/business/the-scarlet-pimpernel-of-funds-management-20120517-1ysnv.html

I talked to a guy this mng (very senior in RE business) who said there is no way that the MPF will not have had large losses mark to market.

You guy have big problems and should have admitted it a long time ago. The last few yrs we have been fed lies – time and time again and the funds have continued to be sold by unscrupulous brokers for high commission.

I fear for all the money in all these funds. Truly disgusting.

Martin – you told me that you had good news on [Client 1] this week, but looking at this – it is probably just more delaying tactics.

I look fwd to hearing from you very soon.

Rgds

Martyn

The LM Emails (#7): New Sales Manager, Martin Venier, Implied that LM Was Operating Like a Ponzi Scheme

In 2009 and 2010, Martyn Terpilowski mainly interacted with LM via sales manager Heather McLeish. When she quit, Martin Venier became the new point of contact. The emails below represent the first engagement between the two men.

At the time the emails were sent, one of Martyn’s clients, “Client 1”, had been queuing to exit the Managed Performance Fund for about a year and a half. Venier’s first email is in response to a letter that Martyn addressed to Peter Drake, which Drake ultimately never replied to (see here).

One of Venier’s statements is highlighted in red. As Martyn pointed out, it seems to suggest that LM was using new investors’ money to pay back old investors—a key feature of a Ponzi scheme. Venier’s statement is very similar to a statement made by director Lisa Darcy in January 2009 (see here).

November 2011

Martin Venier

—–Original Message—–
From: Martin Venier [mvenier@lmaustralia.com]
Sent: Wednesday, November 02, 2011 11:40 AM
To: Martyn Terpilowski
Subject: Email follow up

Dear Martyn, a note to let you know that we will liaise with P Drake with respect to your email. I will be in Tokyo the week after next and could visit your office on the Friday if you are free. I will be back from leave this Friday, in transit at moment, and will get back by then, unless Shauna or PD revert beforehand. Kr, Martin Venier [Hong Kong Office]

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Wednesday, November 02, 2011 11:50 AM
To: ‘Martin Venier’
Subject: RE: Email follow up

Hi martin

What is your role at LM? I will actually be in Singapore and then HK [Hong Kong] from now as I am relocating. Peter knows my view on this and I am sorry there is no excuse or explanation for LM’s actions. If this was a more regulated market, I am sure you could not sell it. I will be interested to see in HK if the regulator is happy with MPF [Managed Performance Fund] being sold as a 1 year term when it isn’t. I am not sure what else I can say – I just want [Client 1’s] money back. I am not interested in more lies that I have received for years from LM. No honest broker could sell this – sadly there are very few.

Martyn

Martyn Terpilowski

—–Original Message—–
From: Martyn Terpilowski
Sent: Friday, 4 November 2011 7:53 AM
To: Martin Venier
Subject: RE: Email follow up

Mate – can I have an update on [Client 1’s] money please? I also have another client in CPAIF [Currency Protected Australian Income Fund] who is locked up in that fund. What is happening there?

I am amazed no one at LM seems to understand what is wrong with marketing a closed fund to investors, but I realsed 2 yrs ago that was the case and the party line that all employees would stick to.

Martyn

Martin Venier

From: Martin Venier [mvenier@lmaustralia.com]
Sent: Monday, November 07, 2011 5:13 PM
To: Martyn Terpilowski
Subject: LM MPF & CPAIF Redemption

Dear Martyn,

I received the latest LM MPF redemption spread sheet a couple of hours ago and will be able to provide an estimate in a couple of hours with respect to [Client 1].

Attached is the latest communication with respect to the CPAIF with respect to the CPAIF unit price reduction to 77c (see below).

CPAIF Redemption Status

In summary,

A CPAIF investor cannot redeem right now and unfortunately it could prove to be misleading if we were to provide you with a time as to when it might happen, mainly because there are so many factors that are outside LM’s control.

LM is investigating a strategy to split the fund into two, one for investor who want exit asap, and one for investors that wish to remain, will accelerate redemptions.

We are investigating the legal process and viability of such a strategy.

At present the focus is on the stabilisation and restoration of the unit price by:

1.         Getting 2010 income distributions up to date (NB. [take notice] distributions have not been declared for 2011),

2.         Repayment of the Deutsche Bank loan as the interest expense is approximately 15% p.a,

3.         Commission payments, and

LM aims to make new loans and start redemptions as soon as market conditions permit.

We will get back to you as soon as new information becomes available. 

Unit Price Adjustment to 77c – CPAIF – due to some fund specific expenses

Our fees were only ever calculated after we had declared our monthly targeted distribution to the clients.

Due to the situation with the closed funds that LM has been dealing with over the past 3 years, last financial year was the very first time that LM needed to take its full entitlement (disclosed in the PDS [Product Disclosure Statement]) to management fees for the year.

Please see averages over the past five years for the various feeder funds – we will also provide FMIF [First Mortgage Income Fund] shortly – however the feeders may be where you receive questions due to the unit price changes here

LM First Mortgage Income – WHOLESALE FUND – average over five years 0.96% pa

LM Currency Protected Australian Income Fund – average over five years 1.31% pa

LM Currency Protected Institutional Fund – average over five years 0.31%

We have previously advised many of the reasons for this and I won’t dwell on this , however as we know the fund and LM was put under significant pressure over the course of the GFC [global financial crisis] as summarised below

1)      The awful situation with the CBA [Commonwealth Bank of Australia]

2)      Cost of refinancing with Deutsche Bank

3)      Borrowers facing difficulties resulting in LM having to step into their shoes and manage all the loans directly

4)      Increased staff in our PAM section [physical asset management section]

5)      LM deciding to retire ALL receivers and managers – thereby undertaking this work ourselves – at a significantly lower cost – however this has resulted in our management fees increasing

I will get to you with the MPF redemption estimate soon.

Kind regards,

Martin

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Tuesday, 8 November 2011 10:36 AM
To: Martin Venier
Subject: RE: LM MPF & CPAIF Redemption

Thanks Martin

I am travelling right now – will take a look.

I look fwd to the update on [Client 1].

Martyn

Martin Venier

From: Martin Venier [mvenier@lmaustralia.com]
Sent: Tuesday, November 08, 2011 2:48 PM
To: ‘Martyn Terpilowski
Subject: [Client 1]

Dear Martyn,

Please note, the estimates are based on the best available information I have right now and are indicative only, any number of factors might cause a change.

The following two MPF investments for [Client 1], [#########] matured on the 2nd of July 2010 so they are easier to estimate.

Based on current levels of inflows we estimate the redemptions might take place In January or February 2012.

We will continue to monitor the investments.

Kind regards,

Martin

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Wednesday, 9 November 2011 10:27 AM
To: Martin Venier
Subject: RE: [Client 1]

Thanks Martin

There seems to me a complete lack of understanding at LM why it is so wrong to take money in to a fund that has effectively a 2 yr delay to get your money out. It is obviously clients are not being told this when they put their money in and therefore it is dishonest. To hide behind semantics and ‘it is the responsibility of brokers to tell people’ lines is just plain wrong. I cannot believe I am the only person who thinks that. The fact you are now trying to tie people into longer terms tells a story also.

The fact that money coming out is as you say ‘based on inflows’ – is just shocking – I have never heard anything like this in my experience of dealing with many funds. Obviously there is the potential of looking like a Ponzi scheme by doing this and that is why all reputable funds that ‘closed’ (or had delayed redemptions) stopped taking money in at this stage. They opened again later once they had a clear plan on redemptions and hence won the respect of reputable brokers. The real worry I have is at LM no one even understands what could be wrong with this. We have heard the same arguments for yrs and nothing changes.

Sadly I was a large supporter of LM but have severely lost my trust in them and I really just want my client’s money back and quick. It really scares me actually.

Rgds

Martyn

Martin Venier

From: Martin Venier [mvenier@lmaustralia.com]
Sent: Wednesday, November 09, 2011 12:24 PM
To: ‘Martyn Terpilowski
Subject: RE: [Client 1]

Dear Martyn,

Your comments are appreciated and have been noted and I will bring them to the attention of management at head office in Australia.

We will keep you updated as news becomes available.

Kind regards,

Martin

Martyn Terpilowski

From: Martyn Terpilowski
Sent: Wednesday, November 09, 2011 12:28 PM
To: ‘Martin Venier’
Subject: RE: [Client 1]

Hi Martin

Peter knows my views and no one seems to understand (or at least acknowledge) how very wrong it is. It is actually questionably legal in many countries. I am sure the Board of LM are very aware of that, but choose to continue operating in this way. Very sad.

The quicker I can get my clients out – the better.

Rgds

Martyn

 

The LM Emails (#6): Director, Lisa Darcy, Inadvertently Admitted that Redemption Payments Were Suspended

One of Martyn Terpilowski’s colleagues had a client invested in LM’s Managed Performance Fund. The client was scheduled to receive a redemption payment in May 2009, but one year afterwards, he still hadn’t received his money.

In July 2010, after persistent requests from Martyn’s colleague, LM said they expected to make the payment by September that year.

September came and went, but the client still hadn’t received his money.

The client was understandably furious and warned LM that he was preparing to take legal action. Given that he held a senior position at a well-known investment bank, LM probably had no choice but to take his threat seriously.

By the end of that year, the client received his money.

Martyn believes this client was one of the last “direct” investors allowed to exit. (“Direct” means he wasn’t invested through a portfolio bond).

In the emails below, the client is referred to as “Client 2”. The names of several LM staff are also mentioned: Shauna Larkin (admin), Heather McLeish (sales manager), and Lisa Darcy (director).

The email written by Lisa Darcy was forwarded to Martyn. When Martyn responded, he highlighted one of Darcy’s sentences in red in order to make a point. The sentence strongly suggests that redemption payments were suspended (not merely delayed as LM persistently claimed).

Darcy also claimed that redemption “delays” were partially a result of needing to meet margin calls related to currency hedging. Martyn argued that this excuse was unacceptable. His colleague’s client had invested in the Managed Performance Fund before it was a multi-currency fund, which means he shouldn’t have been exposed to currency risk at all.

Another sentence written by Darcy is highlighted in blue. She noted that the Managed Performance Fund was “for sophisticated investors only” (i.e., for investors with significant market knowledge and/or substantial assets). Heather McLeash also made the same claim in another set of emails published yesterday (see here). Their statements raise serious questions about why the MPF fund was later sold via portfolio bonds to so many people who obviously did not qualify as “sophisticated investors”.

March 2010

Shauna Larkin

From: Shauna Larkin <slarkin@lmaustralia.com>
To: [Client 2]
Sent: Fri Mar 05 12:45:24 2010
Subject: LM Managed Performance Fund redemption – [#########]

Hi [Client 2],

I know the fact that we have been delaying withdrawals in the fund has been frustrating to say the least.

The end of quarter 1 is fast approaching.  We are finalising a written update at the moment and it will be available next week.  It will cover time horizons for payments and the things we are doing to meet them.

You will receive a copy of this update (as will your financial adviser) and I will discuss via phone the impact this will have on you then.  I will give you a call next week.

I look forward to speaking with you then.

Kind regards

Shauna

Shauna Larkin
Client Relations – Treasury Services
LM Investment Management Ltd

Client 2

From: [Client 2]
Date: Fri, 5 Mar 2010 19:00:18 +0800
To: [Martyn’s Colleague]
Subject: Fw: LM Managed Performance Fund redemption – [#########]

Fyi

[See Larkin’s message.]

Martyn’s Colleague

From: [Martyn’s Colleague]
Sent: Friday, March 05, 2010 8:26 PM
To: Martyn Terpilowski
Subject: Fw: LM Managed Performance Fund redemption – [#########]

[Also see Larkin’s message.]

Sent from my BlackBerry® wireless device

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 06 March 2010 14:40
To: [Martyn’s Colleague]
Subject: RE: LM Managed Performance Fund redemption – [#########]

Joke mate… I have an issue with this also…

MT

July 2010

Heather McLeish

—–Original Message—–
From: “Heather C. McLeish” <hcmcleish@lmaustralia.com>
Date: Tue, 13 Jul 2010 11:39:15
To: [Martyn’s Colleague]
Subject: Are you back in Japan?

I wanted to give you an update on [Client 2’s] redemption.

Please let me know where its best to reach you.

Cheers,

Heather

Martyn’s Colleague

—–Original Message—–
From:[Martyn’s Colleague]
Sent: Tuesday, 13 July 2010 11:05 AM
To: Heather C. McLeish
Subject: Re: Are you back in Japan?

I am not in Japan can you e mail as I am speaking to him today.

Sent from my BlackBerry(r) wireless device

Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 13 July 2010 03:28
To: [Martyn’s Colleague]
Subject: RE: Are you back in Japan?

No problem.

I spoke to the directors this morning and it looks like we will be paying [Client 2] out in September. I am not sure what you would like to tell him as you are no doubt as hesitant as I to give dates when they could change, so I leave that up to you. Good news anyway!

All the best,

Heather

Martyn’s Colleague

—–Original Message—–
From: [Martyn’s Colleague]
Sent: Tuesday, 13 July 2010 11:30 AM
To: Heather C. McLeish
Subject: RE: Are you back in Japan?

That would be for the whole amount and would take place after you have paid the 29 in the line before him.

[Martyn’s Colleague]

Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 13 July 2010 03:31
To: [Martyn’s Colleague]
Subject: RE: Are you back in Japan?

That would be the whole amount yes and that timeline takes the other redemptions into account, yes.

October 2010

Martyn’s Colleague

—–Original Message—–
From: [Martyn’s Colleague]
Sent: Thursday, 7 October 2010 2:26 PM
To: Heather C. McLeish
Subject: RE: Are you back in Japan?

Heather

I have heard nothing from you on [Client 2’s] redemption.

Can you update be by return please?

Thank you.

[Martyn’s Colleague]

Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 08 October 2010 06:53
To: ‘[Martyn’s Colleague]
Subject: RE: Are you back in Japan?

Hello [Martyn’s Colleague],

Apologies for the delay. I was just able to get an update on this client’s account.

No good news I am afraid. The currency movements have not been in LM’s favour requiring funds to go to the margin account making the September time frame to pay out your client null and void.

I realize how frustrating this is, honestly I do, but it is still a waiting game. His redemption is very near the top of the queue, so his payout should be within the next couple of months.

I am sorry to have nothing better to tell you.

Best regards,

Heather

Martyn’s Colleague

—–Original Message—–
From: [Martyn’s Colleague]
Sent: Friday, 8 October 2010 3:56 PM
To: Heather C. McLeish
Subject: RE: Are you back in Japan?

Heather

You virtually guaranteed that it would be in September and I re assured the client accordingly and prevented him pursuing legal action against you.

Please confirm the exact position in redemption queue and when exactly he will be redeemed.

I expect he will now launch a legal case against LM.

Is his coupon still being paid?

[Martyn’s Colleague]

Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 08 October 2010 07:58
To: [Martyn’s Colleague]
Subject: RE: Are you back in Japan?

[Martyn’s Colleague],

I was assured that that was the case at the time I told you.

As I mentioned before it is impossible to confirm the exact redemption date.

It is his right to seek legal action, however the PDS [Product Disclosure Statement] is clear on this.

Yes, he is still continuing to earn the same interest he was during the true investment time. It is the least we can do for the delay.

Best regards,

Heather

Martyn’s Colleague

—–Original Message—–
From: [Martyn’s Colleague]
Sent: Friday, 8 October 2010 4:29 PM
To: Heather C. McLeish
Subject: RE: Are you back in Japan?

Heather

Are you still selling funds without disclosing to investors that they are closed for investment?

[Martyn’s Colleague]

 Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 08 October 2010 08:36
To: [Martyn’s Colleague]
Subject: RE: Are you back in Japan?

Hello [Martyn’s Colleague],

Advisors who sell this fund that I work with do disclose the redemption delays. It is not a closed fund.

 Martyn’s Colleague

—–Original Message—–
From: [Martyn’s Colleague]
Sent: Friday, 8 October 2010 4:42 PM
To: Heather C. McLeish
Subject: RE: Are you back in Japan?

Do you disclose the redemption freeze on your literature?

[Martyn’s Colleague]

Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 08 October 2010 08:52
To: [Martyn’s Colleague]
Subject: RE: Are you back in Japan?

The redemptions are being paid, albeit at a slower rate than they would be in normal market conditions. Please refer to the August portfolio update.

Martyn’s Colleague

—– Original Message —–
From: [Martyn’s Colleague]
To: Heather C. McLeish
Sent: Fri Oct 08 18:04:49 2010
Subject: RE: Are you back in Japan?

Heather

Do you not feel that you have a duty of care to your investors to disclose that there are parties who have been waiting 21 months for redemptions. This redefines the idea of ‘at a slower rate than normal’

I have just spoken to [Client 2] and he intends to launch a legal suit against LM.  I really wish it had not come to this but I have held him at bay for as long as I can and I now feel let down by your promise of September redemptions.

I am completely at a loss to understand your exchange rate rationale.  I was under the impression that you were awaiting certain sales of land.  He invested in AUD [Australian dollars] so how do exchange rates have any bearing?

If you could at least provide a credible explanation for the delay I may be able to take some heat out of this situation.

[Client 2] is a highly experienced and very senior investment banker who has been up until now very patient.  He now sees this as a point of principle and will engage the very best legal council to take on LM.  Surely you could have at least made a part payment by now? LM have damaged my relationship with one of my very best clients and I now feel terribly let down and would appreciate you passing on my concerns to Peter Drake.

If you recall I attended a presentation months ago in Tokyo and it was mentioned repeatedly that LM was paying it’s coupons on time but no mention was made at that gathering that effectively redemptions have been frozen on this fund. You still have not yet replied to my question about the position of [Client 2’s] request in the queue.

I await your response on this matter and consider it appropriate for Peter to reply to my wider concerns.

Regards

[Martyn’s Colleague]

Lisa Darcy

—–Original Message—–
From: Lisa Darcy
Sent: Sunday, 10 October 2010 4:53 PM
To: Heather C. McLeish
Subject: MPF update

Dear Heather

Please pass the following information to [Martyn’s Colleague] in relation to his queries [above]. I am also happy to speak with [Martyn’s Colleague] in person if he requires anymore explanation. I have also passed this on to Peter Drake who has read both [Martyn’s Colleague’s] email and my reply.

Firstly, an update on the Australian Property and Credit markets.

The property market and the general economy in Australia (as evidenced by the strong AUD) has held up well over the last few years, however the credit and financial markets still remain extremely tight.

The banks in Australia are just not lending to the levels they were prior to the GFC [global financial crisis], in particular in the commercial and business sector and more specifically transactions over $5m are just not happening in the current market.

Commercial lending transactions when they do occur are taking as long as 8-12 months  – this makes it very difficult for sellers and purchasers alike.

This is the major factor which has led to the delay in redemption payments to investors as the funds assets are primarily in this sector in Australia.

Several of the assets within the fund are currently available for sale – they include completed developments in the residential, commercial and industrial sectors in Australia – again the sales process is influenced by the availability of credit which as I mentioned above is slow.

One of the larger investments in particular which is located in SE QLD [South East Queensland] (a growth corridor) was offered for either complete or partial sale earlier in the year – this did not eventuate due to reasons outlined above – the fund will continue to hold and develop this asset as it continues to and always did represent an excellent investment opportunity for the fund.

Just so you are aware, the only reason this particular property was ever offered for sale was to satisfy those investors with a redemption request as it was always meant to be a long term hold – bearing in mind the decision to invest in this asset was taken well before the GFC.

The MPF [Managed Performance Fund] is a vehicle which is designed for sophisticated investors only as the nature of a large component of its assets are in the property development sector in Australia (this is how we provide the additional returns) – as we have seen over the last year in particular this can lead to timing issues in relation to the realisation of assets back into cash and cause delays in redemption payments.

The fund also offers investments in multi-currency – this enhances the fund as an investment choice for advisers and their investors.

In order to provide this the fund needs to hedge its FEX [foreign currency] exposure via two providers – they require a certain percentage of margin which increases as you know with the very strong increase in the AUD.

Understand that [Client 2] invests in AUD – however as the fund is pooled we need to manage the FEX margin exposure across the whole book as leaving these positions uncovered could lead to a loss at fund level and could impact all investors.

We also understand how this may seem a little odd to an investor with AUD exposure only but this is the way the fund is structured and we must cover these calls as a priority over redemption payments.

Conversely, the strength in the AUD is a good sign however of the ongoing performance and expectations of the Australian economy and even though this issue is extremely frustrating for those investors who wish to exit – over the medium to longer term this will see the credit and financial markets return to normal and the fund operating within its normal redemption timeframes once again.

[Client 2’s] payment will be one of the first to be released once our funds management committee determines that the assets are protected and that we can apply funds to redemption payments again.

Please let me know if you have any further questions

Lisa

Heather McLeish

—–Original Message—–
From: Heather C. McLeish [hcmcleish@lmaustralia.com]
Sent: 12 October 2010 00:09
To: [Martyn’s Colleage]
Subject: FW: MPF update

Good Morning [Martyn’s Colleague],

Please see the [above] email from Lisa in regards to [Client 2’s] redemption.

You have relocated to HK [Hong Kong], correct? Please let me know if you have time for a conference call this week. Lisa will be in Tokyo next week if you are going to be here we can arrange a meeting.

Best regards,

Heather

 Martyn’s Colleague

—–Original Message—–
From: [Martyn’s Colleage]
Sent: Tuesday, October 12, 2010 2:29 PM
To: ‘Martyn Terpilowski’
Subject: FW: MPF update

what dya think?

See [above]

[Martyn’s Colleague]

Martyn Terpilowski

From: Martyn Terpilowski
Sent: 12 October 2010 15:09
To: [Martyn’s Colleague]
Subject: RE: MPF update

Mmmmmm

1) why are they still taking money in, if this is the case? This should not be allowed and are brokers being truthful when selling this fund (i.e telling clients there are redemption issues).

2) [Client 2] invested in the fund BEFORE it was multi-currency and therefore it is totally unacceptable that this is used as an excuse and is basically not what he bought.

3) why were we told when LM knew already that were delays that there were no delays? That remains a question that has never truly been answered.

4) the comment I have increased the size of and coloured red [above] in regards to [Client 2’s] payment – suggests infact that as I suspected – No payments are being made right now. This makes the fact that they are taking money in even worse.

Martyn