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Hedge Clippings | Friday, 12 March 2021
Hedge Clippings has successfully avoided taking legal action against others, and generally avoided others taking action in the other direction. There could be all sorts of reasons put forward for both options, but we'd like to think it is not just the fact that one needs deep pockets to go to court - or even to threaten, or be threatened with, going in that direction.
Part of it would seem to be plain self preservation. The old saying that the "thinner the ice, the faster one has to skate" probably comes into it as well. One would like to think that one's attitude to business, and other people's money in particular, helps to keep Hedge Clippings out of the sights of ASIC at least.
So where is this particular ramble heading? It would appear James Mawhinney of Mayfair 101's fame is in a different camp as it were, which has ended up in ASIC taking Mawhinney to court. For those not familiar with the case, ASIC has alleged that Mawhinney's Mayfair 101 was "not dissimilar to a Ponzi scheme" as the funds raised from investors in Australian Property Bonds, the last product Mayfair launched, were used to pay investors in other Mayfair products.
That certainly sounds like, or sniffs of, a Ponzi scheme to us.
However, amazingly ASIC's lawyer did not allege conscious (our emphasis) dishonesty by Mr Mawhinney, rather that "his conduct is indicative of serious irresponsibility and disregard for his legal obligations". Such conduct presumably being responsible for many of Mayfair's investors putting, and losing, their superannuation balances - and in some cases their life savings - into Mayfair products.
Mawhinney for his part is claiming ASIC's actions are the cause of the problem, and having taken out large advertisements at the time in the national press to entice (sorry, to advertise) his products, is now on a campaign to shift the blame. Hedge Clippings can recall some of those advertisements, and also commented on them at the time, basically to the effect that "if something sounds too good to be true, it probably is" or "a fool and their money are soon parted".
But back to the start: Some people avoid risk, and thin ice. Others are attracted to it either by design or personality. Most in the financial services industry take pride in their integrity and their responsibility to managing other people's money, and do so as they would their own.
Then unfortunately there are others (fortunately only a few) who take a different view: They see the opportunity in managing other people's money, but then manage it as if it was their own.
One should never say never, for fear of getting egg on one's face, but Hedge Clippings has always had reasonable antennae for that end of the market, and we have tried to avoid and generally succeeded in excluding such funds (including Mr Mawhinney's Mayfair 101 on www.fundmonitors.com). Experience (aka old age and grey hair) might have helped as well.
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