Trilogy Funds will power ahead with its bid for LM's Wholesale First Mortgage Income Fund claiming over 50 per cent support from among the unit holders.
But LM Investment Management has hit back – it said the institutional vote was influenced by two large wrap platform funds that together comprised 43.3 per cent of the vote. It said only five material investors voted in favour of switching the responsible entity to Trilogy.
LM founder and chief executive Peter Drake said the wrap funds represented only about 10 per cent of holders on the LM fund while 90 per cent of holders did not vote for Trilogy.
He said a likely uproar from advisers and investors on behalf of superannuation clients would ensue once they realized the fund had changed hands without their consent and to an entity with a poor track record.
Drake said it was unlikely Trilogy would be successful in its second bid to take over another fund, LM's Currency Protected Fund (CPF) as advisers and investors have a say.
Trilogy said it had received early support for the takeover bid. It said despite the low response rate of less than 20 per cent, which was due to mail delays particularly from New Zealand, the votes received reflected an 85 per cent approval rate for the Trilogy takeover.
Trilogy said LM was stalling by not publishing the funds accounts for the 2011/12 financial year. A move by LM to ban online proxies had exacerbated the delays, according to Trilogy.
Drake said he doubted the mail-delay story. He said the adjournment of the meeting regarding the second fund was due to not having enough votes or not having the right license.
He said Trilogy and LM lawyers decided to ban the on-line voting system due to fraud risk.
Of the 10.74 per cent of the CPF register, 96.1 per cent were against the appointment of Trilogy, Drake said.
