Trio Capital (Trio) provided financial support to financial services groups including Seagrims Accountants and Financial Planners (Seagrims) and Tarrants, the failed firm’s former investment manager Shawn Richard has said.
Richard made the admission in the New South Wales Supreme Court yesterday, the third day of liquidator PPB’s examination into Trio’s collapse.
Robert Newlinds SC, acting for PPB, grilled Richard about the arrangements it had with groups including Seagrims and Tarrants.
Richard, speaking under court privilege, said: “Seagrims, during the course of the transitioning strategy where [they were] moving substantial funds from other product providers to Trio-related funds, asked for financial assistance in the form of a loan.”
“It was definitely agreed that it was a loan,” he said.
He said the relationship with Seagrims was “strong enough” whereby there was no documentation attached to the loan, and that there was a “handshake agreement” where the financial services group would repay the loan when it could.
Seagrims founder Peter Seagrim said: “The financial assistance which was for a small amount was against an advance on future earnings has been paid in full.”
The examination also heard that Trio Capital made payments of over $800,000 to Tarrants.
“Can you offer an explanation of why it was that your company or the company that you were director of was paying $840,000 or so odd dollars to Tarrants in calendar year 2009?” Newlinds asked Richard.
Richard said: “They advised that it was in their practice to receive a thing called a marketing allowance for the business that they bring to product providers.”
“It’s something that they received in the past and it’s something that they asked for,” he said.
Newlinds pressed Richard over whether the marketing allowance was a commission or, in other words, a kickback.
Richard maintained the payment was a marketing allowance and added that the financial support provided to Tarrants and Seagrims was not deducted from investors’ money, but rather came from his boss, Jack Flader.
Trio was placed into liquidation in June, six months after regulators froze its Australian financial services licence and suspended it as the trustee for over $300 million worth of superannuation money.
The hearing continues.
