Brite Advisors Pty Ltd
Frequently Asked Questions
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The Receivers’ investigations remain ongoing. Please continue to check this page for updates. The Receivers can be contacted by email: briteadvisors@mcgrathnicol.com
1. What is the status of the Receivers’ investigations to date?
The Receivers are continuing to progress their investigations and assess possible recovery actions. While the Receivers were required to undertake certain investigations and report to the Court, the investigations into the affairs of Brite Advisors are also critical to identify potential recovery actions available to the Receivers to increase the funds available to Beneficiaries.
The Receivers have reported to the Federal Court of Australia (the Court) on several matters arising from their investigations, including a number of suspected contraventions and offences by Brite Advisors and its directors and officers. For further detail, please see section 8 of the Receivers' report to the Court dated 24 January 2024. Link: Report dated 24 January 2024
Before commencing any recovery action, the Receivers will consider the merits of the action and decide whether it would be commercially viable to do so (i.e. likely produce a benefit for Beneficiaries, having regard to factors such as cost of proceedings, prospects of recovery, etc).
Please note that Australian Securities and Investments Commission (ASIC) continues to investigate Brite Advisors and its directors and officers in respect of suspected contraventions and offences which it has jurisdiction to prosecute in the public interest. It is important to note that this is separate from the Receivers' investigations and any proceedings they may commence, which are focused on recovering funds for Beneficiaries and creditors.
Given the complexity and size of Brite Advisors' business operations, it is expected that it will take some time before the Receivers will be able to conclude their investigations.
The Receivers will provide updates to beneficiaries in relation to the above matters as and when available and appropriate to do so.
2. Where can I find further information about the Receivers’ investigations and suspected offences the Receivers were asked to report on?
Please refer to section 8 of the Receivers' report to the Court dated 24 January 2024.
3. What actions will be taken against the directors and related parties with respect to any identified misconduct?
Liquidators have broad powers of investigation and a statutory duty to report any suspected contraventions of the Corporations Act 2001 by Brite Advisors and its directors and officers to ASIC.
ASIC also have powers to bring claims against relevant and responsible parties. The successful pursuit of such claims by ASIC can result in financial infringement, banning orders and in some cases jail time. The Receivers and Liquidators are working closely with ASIC and will continue to keep ASIC updated as to the status of their investigations.
The Receivers and Liquidators also have power to commence civil proceedings against directors and officers on behalf of Brite Advisors in respect of any breaches of directors' and officers' duties, with a view to recovering compensation to increase the funds available to Beneficiaries and creditors of Brite Advisors.
4. How are the Receivers being paid for the work they are doing?
The Court Orders made on 21 December 2023 provided that, subject to Court oversight and approval, the Receivers’ fees, costs, and expenses (including those relating to their former appointment as Investigative Accountants) are to be paid from the Property (as defined in the Court Orders).
What did the Court define as the “the Property”?
The "Property" is defined by the Court Orders as "all real or personal property, assets, or interests in property of any kind, within or outside Australia and includes any property held otherwise than as sole beneficial owner."
This means all property of Brite Advisors, including property that it holds in its own right as well as property that it holds on behalf of others. This includes the Client AuM.
The Receivers’ remuneration, fees and costs are required to be reviewed and approved by the Court, to ensure that the charges are reasonable, and the work undertaken has been necessary and properly performed before the Receivers are paid.
5. Why have both Receivers and Liquidators been appointed? What’s the difference?
The Receivers are responsible for managing and dealing with Client AuM, including protecting the interests of underlying Beneficiaries and returning Client AuM to Beneficiaries in the manner that the Court agrees is fair and equitable to all.
The Receivers are the only persons authorised to act on behalf of Brite Advisors and the directors' powers are suspended.
The Liquidators are responsible for winding up the affairs of Brite Advisors and have greater powers of investigation and recovery against company directors and officers and other third parties.
These are two very separate roles.
So, what does this mean for you? In summary, the Receivers will be dealing with you as a Beneficiary with an interest in the Client AuM, which is under the control of the Receivers. Following the return of Client AuM to beneficiaries, you may also be a creditor of Brite Advisors in the Liquidation for any shortfall you may suffer on your investment in Client AuM, which will be quantified in due course.
Link: Update and Second FAQ
6. How has the variance in the Client AuM occurred, how can I obtain more information about this?
The Receivers have undertaken a detailed analysis of the variance in the Client AuM. Beneficiaries who would like to read further information should refer to section 6 of the Receivers’ 4 March 2024 report to the Court.
7. What are the next steps in the Receivership? How long will it take?
As part of the formulation of a distribution strategy, the Receivers have now filed their Distribution Framework Application, whereby the Receivers seek Court orders to:
establish an identity verification process for Beneficiaries;
establish a process for Beneficiaries to review the Receivers' calculation of their entitlements as at 13 December 2023 (that date being set by the Court orders made on 5 June 2024) including a process by which Beneficiaries to confirm or dispute that calculation; and
increase the cap on regular pension withdrawals from 30% to 50% of the value of a Beneficiary's model portfolio as at 9 November 2023 as recorded in Salesforce.
This Framework Application does not seek final orders for the distribution of Client AuM held by the Receivers.
As part of the Framework Application, the Receivers provided the Court with a summary of indicative timeline in the lead up to the ultimate Distribution Methodology Application. A copy of this timeline is included in the Receivers Update dated 9 August 2024. Please note that there are a number of factors that may impact the target dates set out in the timeline and it may be subject to further revision.
Update to Trustees and Beneficiaries – 9 August 2024
The Receivers will provide a further update subsequent to hearing of the framework application, set for Wednesday, 21 August 2024.
8. Will the Receivers be able to make an interim distribution to beneficiaries so a portion of my investment can be returned?
The Receivers are considering the possibility of an interim distribution to Beneficiaries as part of their distribution proposal.
9. Will I get all my money back? When?
From the information available, the Receivers have identified an estimated 10% variance between the total Client AuM reported to Beneficiaries as being held by Brite Advisors on their behalf and the actual Client AuM held by Brite Advisors as at 9 November 2023.
Put another way, approximately 90% of Client AuM historically reported as being held by Brite Advisors has been located, secured and is under the control of the Receivers. The Receivers stress that the variance is still subject to investigations and will be subject to change. The factors impacting the variance are explained in detail at section 6 of the Receivers’ 4 March 2024 report.
Link: Report dated 4 March 2024
What does this mean for me? In simple terms, it means that, as at today’s date, Brite Advisors does not have enough money to pay all the Beneficiaries all the amounts owed to them.
The Receivers' investigations are ongoing, and a number of matters are yet to be resolved, including but not limited to:
further investigations into the variance in Client AuM;
establishing an identity verification process for Beneficiaries;
establishing a process for Beneficiaries to review the Receivers’ calculations of their entitlements as at 13 December 2023, and
ultimate distribution of funds to individual Beneficiaries.
These steps will take some time to work through.
On 9 August 2024, the Receivers filed a distribution Framework Application to the Court. This application is to be heard by the Court on Wednesday, 21 August 2024. The hearing will be livestreamed on the Court's YouTube channel:
Link: Federal Court YouTube Channel
As part of the Framework Application, the Receivers provided the Court with a summary of indicative timeline in the lead up to the ultimate Distribution Methodology Application. The Receivers note that there are a number of factors that may impact the target dates set out in the timeline and it may be subject to further revision.
10. What about the existing Client AuM? How is this being managed?
The Client AuM predominantly remains in accounts with IBA, which are under the control of the Receivers.
On 6 March 2024, the Court approved the engagement of a qualified interim fund manager to provide financial services, including:
monitoring the Client AuM;
providing recommendations to the Receivers on steps appropriate to manage risk and adherence to the applicable investment portfolio mandates; and
upon the instructions of the Receivers only, trade the Client AuM as needed to achieve this.
The Interim Fund Manager's appointment is to assist the Receivers in maintaining and preserving the value of the Client AuM. This is an important step in ensuring the ongoing management of the Client AuM for the benefit of the Beneficiaries. The appointment is an interim measure only to manage the Client AuM while the Receivers work towards developing a distribution proposal to return the Client AuM to the beneficiaries.
On 17 June 2024, following the orders made by the Court on 5 June 2024 following conferral with IBA, BML Funds Management Pty Ltd (BML) was appointed Interim Fund Manager. BML has since completed an initial portfolio rebalance to bring the model portfolio component of the Client AuM in line with the relevant portfolio mandates and are now actively managing Client AuM in accordance with Court orders. Correspondence from BML and weekly portfolio reports are available on the Receivers’ website.
Link: Court Order 6 March 2024
Link: Court Order 5 June 2024
11. Can beneficiaries or Corporate Trustees provide trading instructions directly to or contact the Interim Fund Manager?
No, the Interim Fund Manager will be managing the model portfolios on an aggregate basis in accordance with the 6 March 2024 Court orders at the instruction of the Receivers.
Link: Court Order 6 March 2024
12. Will individual trade requests be considered?
For several reasons including but not limited to the identified variance and the comingling of the Client AuM, the Receivers are not able to consider specific trade requests from either Corporate Trustees or beneficiaries at this time.
The Court made orders on 27 March 2024 confirming that the Receivers are justified in refusing to act on specific trading instructions from any third party.
13. Is the existing Client AuM safe? What protections are in place?
The Court has made Asset Preservation Orders and other Court Orders to protect the Client AuM whilst work is being undertaken to:
quantify and reconcile Client AuM losses, and
progress a strategy to ultimately manage and return Client AuM back to Beneficiaries in an equitable manner.
This means that only the Receivers and their authorised representatives can deal with the Property of Brite Advisors, as authorised by the Court Orders.
14. Are the Client AuM Segregated?
The Receivers’ investigations indicate that Brite Advisors’ IBA accounts were held in the name of Brite Advisors in an omnibus structure within each IBA account.
The Receivers are aware that Brite USA has informed its clients that it believes their assets are segregated from Client AuM held for other Beneficiaries.
Brite USA has not provided the Receivers with any documents or other information that support the contention that there was an effective segregation of cash and assets belonging to its clients. The Receivers' investigations to date have not identified any documentation or other information in the available books and records that indicates there was any effective segregation of Client AuM.
However, those investigations are continuing, and the Receivers note that:
to the extent that the assets of any individual Beneficiary have been properly segregated, that will be taken into account when the Receivers make their final application to Court for orders as to distribution; and
the Receivers will correspond with Beneficiaries to verify their entitlement before making any such application for final orders as to distribution and allow them an opportunity to provide any further supporting information to assist in verifying their entitlement.
15. Can the Receivers provide me with an updated investment statement?
The Receivers are unable to provide individual investment valuations at this time for several reasons, including the variance in the Client AuM, the comingled nature of Client AuM held by Brite Advisors and limited company records and access to Brite Advisors’ systems.
As such, neither an accurate valuation nor reconciliation of the variance to the individual Beneficiary level can be provided. Any valuations that you have received are not authorised by the Receivers.
16. Can I withdraw funds?
The Court has approved protocols for dealing with withdrawal requests. As part of those protocols:
only regular pension withdrawals of a Beneficiary’s investment that were in place as at 9 November 2023 can be considered; and
an eligible Beneficiary may not withdraw more than 50% of the recorded value of their investment, calculated by reference to the value of a Beneficiaries’ cash holdings and model portfolio assets as at 13 December 2023.
The protocol is intended to enable those Beneficiaries who have relied on regular withdrawals from their pension investments to continue to have access to those amounts, in a way that is fair and does not prejudice other Beneficiaries, given the identified variance in the Client AuM.
Separately, the Receivers have some (albeit limited) discretion to approve withdrawals in circumstances of beneficiary hardship (supported by evidence) and will continue to consider such requests on a case-by-case basis.
17. Can I transfer all my money to another fund?
The Receivers are unable to consider or process requests to transfer your pension investments out of Brite Advisors to another fund manager or custodian at this time, given the current Court Orders restricting distributions.
Please note, the Court Orders are not intended to be permanent. Rather they are intended to protect and preserve the Client AuM while the Receivers develop their proposal for a distribution process for return of the Client AuM.
18. Can I appoint a new Financial Advisor?
The appointment of a new Financial Advisor is a matter for you as a Beneficiary.
Should you appoint a new Financial Advisor, please advise our office (with documentary evidence) and we will update our records accordingly. As noted above, the Receivers will be unable to provide individual valuation statements to beneficiaries.
19. I am a direct investor with no Corporate Trustee, can I still make a pension withdrawal request?
Yes, Beneficiaries with no Corporate Trustee wishing to request a pension withdrawal should contact the Receivers office directly at briteadvisors@mcgrathnicol.com.
20. I don’t think I meet the pension withdrawal criteria, however, I am experiencing financial hardship, can the Receivers help me access my investments?
The Receivers are empowered by the Court Orders to approve withdrawals required by a Beneficiary due to genuine financial hardship and will consider such requests on a case-by-case basis. Please contact the Receivers’ office at briteadvisors@mcgrathnicol.com if you wish to submit a withdrawal request on the basis of financial hardship.
21. Access to Company Books and Records
The books and records of Brite Advisors do not accurately record the account position of individual Beneficiaries and the Receivers do not currently have access to all the systems required to commence the process of verification of Beneficiaries' entitlements.
The Receivers are working to resolve this position and have been in continual communication, since appointment, with Brite Advisors respective information platforms, namely:
Interactive Brokers Australia (IBA)
The Receivers, together with the Interim Fund Manager have full access to all of Brite Advisors’ IBA accounts.
Salesforce
Following months of negotiations with Salesforce, an agreement was reached between the Receivers and Salesforce to enter into a new contract for ongoing services. Shortly after this date, on 24 April 2024, the Receivers were advised that the Brite Advisors’ “org” in Salesforce was inadvertently deleted from the Salesforce system by Salesforce, despite earlier assurances from Salesforce that this would not occur. The Receivers have secured a back-up of Brite Advisors’ data and are working closely with the Australian-based Salesforce team to rebuild the Brite Advisors “org”. This restoration process requires a significant amount of work which is now well progressed and is expected to be completed by early September 2024.
AutoRek
AutoRek continue to provide the Receivers with access to the AutoRek data which has been critical to maintaining Beneficiaries’ positions. The Receivers are continuing to engage with the Liquidators of Brite Technologies Limited, a UK entity in the Brite Group, and AutoRek in relation to ongoing commercial and contractual arrangements.
22. Unauthorised correspondence to Beneficiaries and Trustees
The Receivers are also aware that some Beneficiaries have received correspondence from a party purporting to provide “Brite Client Help”.
The Receivers did not authorise this communication and have no affiliation with the group purporting to provide “Brite Client Help”, nor have the Receivers shared, or consented to the sharing of, any personal Beneficiary data.
We encourage you to carefully consider whether you should provide any personal information to the persons purporting to provide support as offered in the communication.
Please note, for the avoidance of doubt, any communications concerning the Client AuM issued to you by any persons other than the Receivers and their firm, McGrathNicol, are not authorised by the Receivers. If you receive any communications regarding the Client AuM and are unsure of whether it has been authorised by the Receivers, please contact us at briteadvisors@mcgrathnicol.com. We strongly caution Trustees and Beneficiaries against interacting with these third parties in respect of the Client AuM.
23. Payment of Advisory and Trustees’ Fees
The Receivers are of the view that the Advisory and/or Trustees’ fees are not trading expenses of Brite Advisors and therefore, they are unable to pay them while the current asset preservation orders remain in place.
Brite USA
The Receivers have been engaged in correspondence with Brite USA regarding various matters relating to the Client AuM, including Brite USA's request that the Receivers pay Brite USA’s advisory fees from the Client AuM.
In response to Brite USA’s request for the Receivers to outline their position in respect of Brite USA’s entitlement to payment of advisory fees, the Receivers advised Brite USA that the Receivers do not consider the advisory fees are trading expenses of Brite Advisors and therefore are not able to be paid from Client AuM.
24. Beneficiaries' concerns about their Trustees
We have received correspondence from several Beneficiaries indicating concern regarding their Trustee's independence or connection with Brite Group entities or associates.
The Beneficiaries will be invited to provide feedback to the Receivers during the proposed consultation process (refer to FAQ 7) concerning the Receivers' proposed manner of distributing the Client AuM. Any Beneficiary's feedback or concerns regarding their Trustee will be considered as part of that process.
25. What is the reasoning behind the Receivers’ proposed timeline in the framework orders sought?
As part of the Framework Application (refer to FAQ 7), the Receivers provided the Court with a summary of indicative timeline in the lead up to the ultimate Distribution Methodology Application.
The indicative timetable is proposed to allow sufficient time for a number of important steps to be taken, before the distribution of the Client Assets under Management (Client AuM) can be ordered by the Court. These matters are addressed fulsomely in the Receivers' report to the Court. The Receivers have asked the Court for permission to publish the Report on their website so that beneficiaries and other interested parties may read it. The Receivers expect the Court to make these orders at the hearing on 21 August 2024 and, subject to those orders being made, will publish the report as soon as possible thereafter.
In the meantime, however, the Receivers note that these steps include:
1. allowing sufficient time to work with Salesforce and rebuild the Brite Advisors “org”, that had been inadvertently deleted;
2. an identity verification process for beneficiaries;
3. an entitlement verification process to allow beneficiaries to review the Receivers’ calculations of their entitlements as at 13 December 2023, including a process by which beneficiaries can confirm or dispute those calculations. The Receivers have over 2,000 beneficiary claims to consider;
4. a Consultation period that allows for beneficiaries, corporate trustees and any other person with an interest in the Client AuM to provide feedback to the Receivers on their proposed method of distributing the Client AuM, which will be explained in detail in an explanatory memorandum that will be approved by the Court prior to issue; and
5. Considering and obtaining the Courts’ guidance on fairest way to distribute the Client AuM, including hearing from the Receivers, ASIC and any interested parties that the Court has granted leave to be heard.
The proposed timetable will enable several material Court documents and reports to be prepared and filed and subsequent hearings to occur, including the Explanatory Memorandum Application and Distribution Methodology Applications Hearings.
The timetable must provide sufficient time for a fair and equitable process to be undertaken, providing beneficiaries and corporate trustees an opportunity to be heard on a range of matters, which are complex in nature.
The Receivers reiterate that the proposed timetable is indicative and there are several factors that may impact whether the target dates will be met. The Receivers also reiterate that the proposed timetable is subject to the Court's consideration and approval at the 21 August 2024 hearing.
In the meantime, the Client AuM continues to be managed by the Interim Fund Manager on an aggregated basis and in line with model portfolio investment mandates.