The administrator of Sonray Capital Markets (Sonray) has recommended the company be wound up as any attempt at fund recovery would likely only return between 25 to 30 cents in the dollar to investors.
In an administrators report dated 19 October, Ferrier Hodgson said a company wind up is in the best interests of investors and creditors.
“We are of the view that extending that convening period any further is unnecessary and that in order to progress our investigations further, winding up the company now is in the best interests of creditors/investors,” the report said.
The report found that from the 2007 financial year to the 2009 financial year, Sonray’s total expenses increased by 241.54 per cent or $4.2 million, whereas gross profit increased by 133.46 per cent or $1.2 million.
“The 2007 to 2009 audited financial statements of the company indicate that it held sufficient total assets to meet its total liabilities. However, the audited financial statements did not disclose or report on the transactions which flowed through the client segregated account,” it said.
Investigations in relation to the alleged rogue trader found rebates which had been made to a number of investors totalled about $1.5 million in unfunded transactions.
Sonray databases revealed more than 1000 rebate transactions totalling about $5.9 million.
“It is clear the company uploaded rebates to the various investor accounts without actually funding the rebates by depositing funds into the client segregated account,” the report found.
The unfunded rebates provided to various investors accounted for about $5.9 million of the $49 million deficiency in the client segregated account, the report said.
The report found that if the company was placed into liquidation, the administrator would investigate large amounts of money alleged to have been used by the company’s chief executive Scott Murray and company co-founder Russell Johnson for personal means.
The administrator also found Sonray was more likely than not insolvent from at least June 2008.
The administrator also indicated that it may file legal proceedings against Sonray-linked auditors HLB Mann Judd and PricewaterhouseCoopers, which they believed did not do their duty.
