Saturday, July 24, 2010

Already a short follow up on Tarrants and Astarra

The local paper has reported that Ross Tarrant has closed the financial planning arm of his business

Ross Tarrant’s business survived the financial crisis – according to quotes attributed to him in the local paper – by taking undisclosed commissions called “marketing allowances” to direct money into Astarra funds.

His business however it appears does not survive his clients having their retirement savings stolen.

The Tarrants website is dead today too.

Australia has a system of privatized social security.  The US flirted with such a system too.  However this case shows that getting ordinary members of the public to deal with intermediaries (brokers, financial planners etc) can often be a quite one-side affair.  The local paper also points to a local (coal) miner who lost $200 thousand in this debacle.  He says he would never have invested had he known about the secret commissions.  I guess that is why they were secret.

7 comments:

Anonymous said...

John

Are there new rules coming in to prevent this stuff in the future?

Anonymous said...

The Mercury is Fairfax for all its issues (cant get a name right and dumbed down version of the Herald), has run some credible campaigns that News probably wouldn't notably pedophiles in the local church and that with a RC editor. It also has a local feel to it still which a lot of regional papers dont. no personal interest stated!

Anonymous said...

I assume Peter Johnston still hasn't taken that bet?

T

Anonymous said...

Despite not being leftie by any margin, I have some serious doubts about entirely privatised social system. Basically, it's a very large invitation to either fraud (if the market for it is fragmented), or extracting large rents (if it isn't).

I'd love to come up with something that would solve it, but just about anything ends too convoluted.

The only thing I can even remotely think of is alongside-investing.
That is, people would not invest for a fee as such, but would alongside someone, who would be required to have say 20-40% of investment in the vehicle. It would also prevent the funds from becoming way too large, when they can't invest efficiently anymore either.

This should be still attractive to the good investors (more money = lower fixed costs and ability to pursue a few more opportunities at any given time), and dissuade me-too incapable ones.

The current percentage-upside-option model is just wrong, and leads to a whole host of skewed incentives.

But What do I Know? said...

As an American, I find this fascinating--and completely unreported in this country (as far as I can tell). Thanks once again for your blog, JH.

Anonymous said...

401ks in the US mostly funnel to 3 or 4 big mutual fund companies, due to partnerships between major payroll processors and the funds. The funds performances are mediocre to poor. Here we see that restricting individual choices can be a very bad thing. I'd rather take my chances with more choices and more fraud potential, rather than be restricted to a few options which grow to be these huge, fat, inefficient capital allocators.

Anonymous said...

Perhaps a good question to ask Ross Tarrant is did he (and a staffer) enjoy his trip to the rugby 7's in Hong Kong this year?

And did he charge it to the firm as a business expense in Australia for tax purposes given he put it about he intended to go and find where clients monies had gone?

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.