Tweed Shire Council is one of five councils across NSW set to launch lawsuits against a financial advisory firm which has collapsed into administration with around $3.5 billion in funds under management.
Three of the lawsuits are reportedly seeking collective damages of more than $10 million over advice given on investments in collateralised debt obligations (CDOs), the controversial investment vehicles popular in the mid-2000s and blamed in part for triggering the global financial crisis.
The firm, Oakvale Treasury, was placed in administration on July 23, with Ferrier Hodgson appointed, according to a report by the business newsletter SmartCompany.
Tweed Council’s acting general manager Troy Green said that council had been trying to mediate with the firm for the past six months over the failed investments.
Mr Green did not disclose the exact amount owed to council, only that it represented the lost ‘opportunity’, or interest foregone, on a $2 million investment with Oakvale.
He said that from the perspective of council’s $160 million investment portfolio, the loss was ‘pretty small’, compared to the four other big councils which appeared to have each lost millions of dollars each.
But he said, ‘any loss of public money is unacceptable and we’ll pursue it to get the right outcome for the community.’
Mr Green said he would soon provide a full report on the issue for councillors and the public.
He said that now the firm was in voluntary administration, Council was considering options to recover funds.
Tweed Council has joined with four of the biggest city councils in NSW: Woollahra, Penrith, Liverpool and Wollongong in the recovery action.
Source: Echonet Daily