Gold Coast's LMIM mortgage fund collapse reaches Malta as regulator launches probe

The collapse of Gold Coast mortgage fund manager and property developer LM Investment Management (LMIM) has reached as far as Malta, with the country’s financial markets watchdog launching an investigation into the sale of securities to local investors.

The Malta’s financial services regulator (MFSA) is currently examining complaints from investors of alleged miss-selling by the company, it told online journal, International Adviser.

The regulator will also examine how LMIM securities were sold in Malta.

LMIM collapsed in March leaving small investors and overseas investors facing cumulative exposures totalling around $740 million.

Investments in LMIM’s various mortgage funds were sold to overseas investors via financial intermediaries.

LM said it sold investments in its funds to 73 countries including Canada, the UK, South Africa and Israel.

Maltese press reports say 631 Maltese investors have invested more than €14 million (A$17.6 million) in two Australian property-linked funds administered by LMIM.

Most of the $350 million raised for the flagship LM Managed Performance Fund (LMPF) was raised from overseas investors.

KordaMentha and its affiliate firm Calibre Capital were recently appointed joint trustees of the LMPF following a Supreme Court of Queensland appointment.

The principal asset of the fund is an investment in Maddison Estate, a large proposed residential development on the Gold Coast which has recently been the subject of debate about its value.

John Park and Ginette Muller were appointed voluntary administrators of LMIM on March 19.