Glorious Easter Weekend in Whitianga
The Mathematics of Cluedo

Cheated or Credulous?

The investors in Blue Chip are, generally, probably right to be aggrieved. The managers of a company should make sure that shareholders bear the brunt of risks - not investors. Although this will depend on the nature of the investment, the amount of risk an investor expects to face should be clear to them - and where this is shared, then the demarcation lines should be known.

All that being said, reading the NZ Herald article from Monday provides some food for thought. Some of the investors must have been credulous, or happy enough to take big risks when the property market looked like a one way bet. Take the option to invest in an apartment which a Blue Chip company would then have the option to buy back just before completion of the development delivering a profit to the investor. Unless outright lies are being told - both verbally and in document - then some of these people were being pretty cheerful about the risks in the face of rising concern about the property market.

If, on the other hand, outright lies were told - and the documentation was solid - then why didn't the documents get read? Maybe here there is an option to pursue the sales people concerned - a hard sell and a dubious 'explanation' of complicated documentation can get in the way of the truth. I hope the investors group looks at this option closely.

Or, perhaps the documents were false too - in which case there may be grounds for the involvement of Police. If this is the case, then likewise, I hope the investors group looks hard at the evidence and the possibility of action.

The difficulty will be to sort the wheat from the chaff though. Some will have been subject to lies and deceit, some a 'hard sell', and some... just to their own desire for gain with disregard to the possible risks.

There will be plenty of direct investors in property who will be hung out to dry by the market - and the virtue of being direct investors means they will have no-one else to blame.


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