Thursday, 5 December 2013

Clime Capital (CAM.AX) reveals hidden crossholding fraud

Clime Investment Management (CIW.AX) manages Clime Capital (CAM.AX) as well as wholesale funds. CIW owns 7.82% of CAM, which is associated with WAM, which owns 20.82% of CIW. CAM is a listed investment scam paying dividends out of capital raisings, as management fees swallow most cash generated from assets, with the fair value of CAM but a fraction of its asset backing. The Clime fund empire is a circular investment scam, similar to that of van Eyk and Aurora.

CIW manages several listed and unlisted funds. Instead of purchasing actual assets with the money it was entrusted, CIW created internal crossholdings between its funds, and failed to disclose these holdings in substantial shareholder notices or related party disclosures. This is securities fraud. On 5 December 2013 CIW suddenly revealed a previously undisclosed stake in CAM held through its wholesale funds, bringing total ownership to 19.20% instead of the previously disclosed 7.82%.

In a country where the regulator was doing its job instead of bleating its magnificence, this fund scam would have led to arrests and fraud charges. CIW openly breached its fiduciary duty by diverting funds into crossholdings, doubledipping on fees and deliberately inflating its NTA. CIW purposefully moved investor money into crossholdings that have zero net value for investors but increase fees for CIW. The CIW funds that hold CAM are fraudulently overstating their NTAs at this moment. This is fraud, without any question.

CIW went so far as to deliberately try to hide its fraud in annual reports and other disclosure, yet still ASIC refuses to do anything. CIW still has not disclosed exactly when it started its internal crossholding fund fraud, nor at what price, nor how much unrealized profits and fees have been generated by the scam.

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