Brite Advisors Pty Ltd

The Receivers filed their Explanatory Memorandum and fifth report to the Court on 4 December 2024 (Fifth Report). This follows and builds upon:

• the Receivers’ report to the Court dated 24 January 2024 (Second Report);

• the Receivers’ report to the Court dated 4 March 2024 (Third Report); and

• the Receivers’ report to the Court dated 9 August 2024 (Fourth Report).

Prior to the Receivers’ appointment as Receivers and Managers, they were appointed as Investigate Accountants, and in that role filed a report to the Court dated 8 December 2023 (First Report).

For details in relation to the matters arising from the Receivers' investigations, including suspected contraventions and offences by Brite Advisors and its directors and officers, please refer to:

• section 8 of the Second Report;

• section 6 of the Fourth Report; and

• section 5 of the Fifth Report.

The Receivers continue to investigate potential recovery actions against third parties and the directors and officers of Brite Advisors. Irrespective of the merits of these claims, they will only be pursued if there is likely to be a commercial return to Beneficiaries. To avoid compromising any recovery actions, the Receivers are unable to disclose any further information as to the nature of the potential claims that they are investigating.

The Receivers understand that the Australian Securities and Investments Commission’s (ASIC) investigation relating to Brite Advisors and its directors and officers is ongoing . This is separate to the Receivers' investigations into potential recovery actions.

Please see ASIC’s website for further information relating to the status of its investigations into Brite Advisors.

Liquidators and Receivers have broad powers of investigation and a statutory duty to report any suspected contraventions of the Corporations Act 2001 (Cth) by Brite Advisors and its directors and officers to ASIC.

ASIC also have powers to bring enforcement action. The successful pursuit of such claims by ASIC can result in financial penalties, 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 continue to investigate potential recovery actions against third parties and the directors and officers of Brite Advisors. Irrespective of the merits of these claims, they will only be pursued if there is likely to be a commercial return to Beneficiaries. To avoid compromising any recovery actions, the Receivers are unable to disclose any further information as to the nature of the potential claims that they are investigating.

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 Client AuM.

The Receivers’ remuneration, fees and costs are required to be reviewed and approved by the Court prior to payment, to ensure that the charges are reasonable, and the work undertaken has been necessary and properly performed. All Corporate Trustees are notified of the respective amounts and provided with the Receivers’ remuneration and costs and expenses reports immediately after they are submitted to the Court.

The Receivers are appointed over all "Trust Assets" held by Brite Advisors, as that term is defined in the Court Orders made on 6 February 2024, which includes the Client AuM. The Receivers are responsible for holding and preserving, and in accordance with the Court orders, managing the Client AuM, including protecting the interests of underlying Beneficiaries and returning Client AuM to Beneficiaries in the manner that the Court orders.

The Receivers are the only persons authorised to act on behalf of Brite Advisors with respect to the Trust Assets and the directors' powers are suspended.

The Liquidators are appointed to Brite Advisors and are responsible for winding up the affairs of Brite Advisors and have broad powers of investigation and have control of any property of Brite Advisors that is not part of the Trust Assets. As the Receivers have previously reported, Brite Advisors has no material property other than the Trust Assets.

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 or Corporate Trustee with an interest in the Client AuM, which is under the control of the Receivers.

• Update and Second FAQ

• Receivers and Managers' Report dated 24 January 2024 (Second report)

The Receivers undertook a detailed analysis of the variance in the Client AuM, as detailed in section 6 of the Third Report. This analysis has been updated and is set out at section 4.1 of the Fifth Report.

As at 29 November 2024, the Receivers estimate that Brite Advisors held circa USD$714.0m in Client AuM. This represents an estimated USD($11.2m) (or 1.5%) shortfall to total Beneficiaries’ claims as at 13 December 2023, excluding the impact of potential taxation liabilities (refer to FAQ 27).

The quantum of the shortfall varies with time and may materially change due to a number of factors.

• Receivers and Managers' Report dated 4 March 2024 (Third report)

The Receivers' proposal for the distribution of the Client AuM does not currently contemplate any distribution to Beneficiaries before the Court makes orders on how a distribution should occur. See further details in FAQ 9 and 24.

The Court has approved a protocol which enables the Receivers to adjudicate Beneficiary requests for the withdrawal of funds.  If you do need funds from your pension to meet your living costs or to avoid financial hardship, please speak with your pension administrator.  

A simple distribution by reference to the records held by Brite Advisors is not possible.

Beneficiaries may have understood that certain investments were held for them by Brite Advisors, received account statements that identified specific asset holdings with Brite Advisors at various times, or otherwise received reassurance from Brite Advisors (or other parties) relating to the assets held for them. However, this does not necessarily mean that those investments were actually held by Brite Advisors. This applies regardless of: (i) whether the investments were in the form of a model portfolio or bespoke investment; or (ii) whether Beneficiaries understood that their assets were purported to be held on a “segregated” basis. See the Receivers’ Fourth Report at [2.1.14], [2.1.17] – [2.1.18], [2.1.23] – [2.1.26], [5.6.1] – [5.6.2], [5.6.27] – [5.6.48], [6.8], and [6.9].

• Receivers and Managers' Report dated 9 August 2024 (Fourth Report)

The Explanatory Memorandum explains that Beneficiaries will fall into six different categories which will determine what pool of assets they are entitled to claim against, and how their distribution will be determined. Some Beneficiaries’ may have claims in multiple categories. Those categories are set out at Appendix A of the Explanatory Memorandum.

The Receivers will write to individual Beneficiaries separately to advise which category or categories they fall into.

• Explanatory Memorandum dated 4 December 2024: Distribution to Beneficiaries of Brite Advisors Pty Ltd

The purpose of the extension of time is to allow the Receivers sufficient time to consider and respond to feedback on the Explanatory Memorandum that was received from Corporate Trustees and Beneficiaries during the Consultation Period and, where appropriate, incorporate any changes to the proposed distribution methodology with the full benefit of that feedback.

The Distribution Methodology Application hearing has not been listed by the Court at this stage and will not occur until any applications for leave to be heard have been determined by the Court.

For additional information on the proposed Distribution Methodology Application refer to FAQ 27.

• Receivers and Managers' Report dated 9 August 2024 (Fourth Report)

• Receivers and Managers' Supplementary Report to Court dated 4 December 2024 (Fifth Report)

• Update to Trustees and Beneficiaries - 24 February 2025

• Update to Beneficiary and Trustees - 6 March 2025

As at 29 November 2024, the Receivers estimate that Brite Advisors holds circa USD$714.0m in Client AuM and has an estimated USD($11.2m) (or 1.5%) shortfall to Beneficiaries’ claims as at 13 December 2023, excluding the impact of potential taxation liabilities. The quantum of the shortfall varies with time and may materially change due to a number of factors.

The factors impacting the shortfall are explained in detail at section 6 of the Receivers’ 4 March 2024 report, together with section 5 of the Fifth Report.

• Receivers and Managers' Report dated 4 March 2024 (Third report)

• Receivers and Managers' Supplementary Report to Court dated 4 December 2024 (Fifth Report)

Section 4 of the Explanatory Memorandum contains details as to how you will receive your distribution.

• Explanatory Memorandum dated 4 December 2024: Distribution to Beneficiaries of Brite Advisors

The Receivers are unable to provide an indication as to an anticipated timing of a distribution at this time and until such time that the Court proceedings, referred to in FAQ 6 and 26, are sufficiently progressed. However, the Receivers assure beneficiaries that the Receivers’ priority is facilitating the return of the client funds as efficiently and effectively as possible and we will provide Corporate Trustees and Beneficiaries with further updates in due course.

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:

1. monitoring the Client AuM;

2. providing recommendations to the Receivers on steps appropriate to manage risk and adherence to the applicable investment portfolio mandates; and

3. 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.

In relation to model portfolio investments, the rebalanced Client AuM is now invested in accordance with portfolio mandates, which comprises a broadly diversified portfolio and will continue to be managed accordingly.

In relation to bespoke investments, these assets are being monitored and reconciled on a regular basis.

As reported in the Fifth Report, Client AuM invested on the IB Platform (both model portfolio and bespoke assets) have performed favourably with aggregated growth of approximately 13% for the period from 13 December 2023 to 29 November 2024.

Weekly portfolio reports produced by the Interim Fund Manager are available via the Brite Advisors portal on the McGrathNicol website.

• Court Order 6 March 2024

• Court Order 5 June 2024

• Update to Trustees and Beneficiaries 20 May 2024

• BML Weekly Portfolio Reports

• Update & FAQ 28 August 2024

Eligible Bespoke Asset Trading Instructions

The Receivers filed an application for directions and orders with the Court which was listed for hearing on 19 February 2025. The February Orders enable the Receivers to do the following with respect to Eligible Bespoke Assets:

• The Receivers may offer Eligible Beneficiaries whose verified entitlements as stated in their Valuation Notices (refer to FAQ 23) include Eligible Bespoke Assets with an option to give instructions to sell those holdings;

• The Receivers may determine, at their absolute discretion, the time at which to provide this option and the period during which such instructions may be given;

• If instructions are received from those Eligible Beneficiaries (such instructions to be given through their Corporate Trustee where applicable), the Receivers may (but not must) instruct the Interim Funds Manager to sell that holding in a manner and over a period of time considered to be appropriate on advice from the Interim Fund Manager;

• The Receivers are to deposit the cash proceeds of that sale in a bank account or term deposit, without converting the denominated currency and comingled only with the proceeds of other such sales, with an Australian Authorised Deposit-taking Institution; and

• The Receivers are to hold the funds until such time as that Eligible Beneficiary’s rights to those funds can be finally determined and a distribution can be made.

The term “Eligible Beneficiaries” is defined in the February Orders to mean all Beneficiaries who (a) have completed the Identity Proofing process, and (b) have completed the Entitlement Verification process.

The term “Eligible Bespoke Assets” is defined in the February Orders to mean any asset identified in a schedule of assets to be published by the Receivers, which shall include (a) bespoke assets held on the IB Platform where there is no variance between the 13 December 2023 Data and the actual holdings of Brite Advisors, and (b) bespoke assets held on the IB Platform where there is a variance between the 13 December 2023 Data and the actual holdings of Brite Advisors, but those assets are held by a single Beneficiary according to the 13 December 2023 Data. The Receivers may in their discretion exclude any assets from the schedule of assets to be published.

In accordance with the Court Orders on 19 February 2025, net proceeds from any Eligible Bespoke Asset trading will be held in cash with an Australian Authorised Deposit-taking Institution until such time as Eligible Beneficiary rights can be finally determined and a distribution can be made.

Alternatively, if not sold down, Eligible Bespoke Assets will remain invested and Eligible Beneficiaries rights will be similarly determined and relevant distributions will be made in due course. The purpose of the option to sell down Eligible Bespoke Assets into cash holdings is simply to de-risk those assets should Eligible Beneficiaries wish to do so.

• Receivers and Managers' Report dated 9 August 2024 (Fourth Report)

• Court Order dated 29 October 2024

• Update to Trustees and Beneficiaries – 24 February 2025

• Court Order dated 19 February 2025

• Explanatory Memorandum: Distribution to Beneficiaries of Brite Advisors Pty Ltd dated 4 December 2024

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

Yes, trade requests in relation to Eligible Bespoke Assets (refer to FAQ 12) can be considered by the Receivers and must be submitted by Eligible Beneficiaries via their Corporate Trustee in circumstances where a corporate trustee arrangement is in place.

Recently, the Receivers wrote to all Eligible Beneficiaries whose verified entitlements as stated in their Valuation Notices include Eligible Bespoke Assets in relation to the opportunity to provide relevant instructions.

If you believe you may hold Eligible Bespoke Assets and seek to have these sold down, please contact the Receivers at briteadvisors@mcgrathnicol.com

In relation to any Eligible Bespoke Asset sell down instructions, the Receivers will implement a monthly trading process. Eligible Bespoke Asset trading requests will be open for Eligible Beneficiaries to submit (via corporate trustees where relevant) to the Receivers on or before the 20th of each calendar month. Subject to trading requests meeting the Court criteria, Eligible Bespoke Asset sell down trades will be executed on the final day of trading of each calendar month.

The Receivers will instruct BML Funds to action the relevant sell down instructions. If any concerns as to the sell down instructions are raised by the Receivers or BML Funds, the Receivers may contact Eligible Beneficiaries with respect to their sell down instruction.

• Court Order dated 19 February 2025

The Court has made Asset Preservation Orders and other Court Orders to protect the Client AuM (including appointment of the Interim Fund Manager) whilst work is being undertaken to:

1. quantify and reconcile Client AuM losses, and

2. 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 lawfully deal with the Property of Brite Advisors, as authorised by the Court Orders.

The Receivers are aware that Brite US has informed its clients that it believes their assets are segregated from Client AuM held for other Beneficiaries.

The Receivers’ Fourth Report details that during the period from June 2021 to September 2023, there were several arbitrary transfers of Client AuM between IBA Accounts which appear to be directed at demonstrating to third parties that there was segregation of certain Beneficiaries’ Client AuM from others. The timing of these arbitrary transfers suggests that they were made primarily in response to financial regulatory investigations commenced in the US and the UK.

The Receivers have further investigated these matters and have provided an update in the Fifth Report, reaching the conclusion that the segregation of assets into different IBA Accounts does not constitute an effective segregation of Beneficiaries’ interests in a legal sense nor did it give rise to a ring fencing of assets to protect certain accounts from the shortfall.

• Receivers and Managers' Report dated 9 August 2024 (Fourth Report)

• Receivers and Managers' Supplementary Report to Court dated 4 December 2024 (Fifth Report)

As part of the entitlement verification process, Beneficiaries were provided with access to a Valuation Notice and supporting information.

If you have not yet received access to your Valuation Notice and have not otherwise received any communication from the Receivers relating to reasons why your Valuation Notice may have been withheld, please contact us as soon as possible at BriteAdvisorsValuation@mcgrathnicol.com.

Please note that the amount shown on your Valuation Notice is not the amount which will be distributed. Your Valuation Notice sets out the value of the assets that Brite Advisors ought to have held on your behalf as at 13 December 2023. The distribution amount will be calculated as proposed in the Explanatory Memorandum. Refer to FAQ 23 for further information pertaining to the Valuation Notice Process.

• Receivers and Managers' Report dated 9 August 2024 (Fourth Report)

The Court has approved protocols for dealing with withdrawal requests. As part of those protocols the Receivers are acting properly and are justified in:

• only assessing and processing regular pension withdrawals of a Beneficiary’s investment that were in place as at 9 November 2023 can be considered;

• declining to assess or process a withdrawal request where that withdrawal would result in total withdrawals since 9 November 2023 exceeding 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 (excluding the value of any bespoke asset holdings) as at 13 December 2023; and

• 30% of the value of the Beneficiary’s Pension Entitlement Bespoke Asset (see definition below) as at 13 December 2023

• By the term ‘Beneficiary’s Pension Entitlement Bespoke Asset’, the Receivers mean:

• Bespoke assets held on the IB Platform where there is no variance between the 13 December 2023 Data and the actual holdings of Brite Advisors; or

• Bespoke assets held on the IB Platform where there is a variance between the 13 December 2023 Data and the actual holdings of Brite Advisors, but (i) those assets are designated as being held by a single Beneficiary, and (ii) the actual holding of Brite Advisors is at least 60% of the holding recorded in the 13 December 2023 Data.

If you have any queries as to whether certain bespoke assets are “Pension Entitlement Bespoke Assets” please contact the Receiver at briteadvisors@mcgrathnicol.com.

The Receivers will also assess withdrawal requests which were not in place as at 9 November 2023 in circumstances of financial hardship. See FAQ 22 for further information.

The change in the withdrawal protocol does not mean that all Beneficiaries are entitled to withdraw (i) 50% of the value of their cash holdings and model portfolio generally, and/or (ii) 30% of the value of their bespoke asset holdings generally. The updated Court Orders are to support Beneficiaries who are reliant on receiving ongoing regular pension withdrawals to fund living costs to continue to do so.

For the avoidance of doubt, non-regular lump sum withdrawals (except for PCLS payments) and full surrender requests are unable to be processed by the Receivers pursuant to the current Court Orders.

As has been the case to date, PCLS payments and/or “new” requests from Beneficiaries becoming of pension age and/or commencing retirement will be considered by the Receivers in accordance with existing withdrawal parameters.

In the event you have invested directly with Brite Advisors, please send your pension payment withdrawal requests by email to briteadvisors@mcgrathnicol.com, including all necessary supporting documentation. Please include "Pension payment withdrawal request" in the email subject line to allow the request to be efficiently categorised and allocated to a team member from the Receivers' team for processing.

• Court Order 21 December 2023

• Court Order 2 September 2024

• Update – 5 September 2024

• Court Order dated 19 February 2025;

• Update to Trustees and Beneficiaries – 24 February 2025

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.

Link: Court Order 21 December 2023

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.

Yes, Beneficiaries with no Corporate Trustee wishing to request a pension withdrawal should contact the Receivers office directly at briteadvisors@mcgrathnicol.com.  

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.

The Court Orders require the Receivers to calculate Beneficiaries’ entitlements by reference to the value of the money and investments which should have been held on behalf of each Beneficiary as at 13 December 2023.

The basis of the Receivers' calculation of each Beneficiaries' entitlement is set out FAQ – Valuation Notice, available here. In short, the Court Orders permitted the Receivers to adjust the 13 December 2023 Data to address various issues identified by the Receivers arising from Brite Advisors' recording of historical data (these issues are explained in the Receivers' update dated 23 October 2024 and detailed in the Twelfth Smith Affidavit). The adjustments made to the 13 December 2023 Data, included:

• adjusting the dividend data to correct the material errors in the reporting of the dividends earned by Beneficiaries;

• removing all withholding tax amounts applied to Beneficiaries investments; and

• valuing the entitlements related to Minerva Notes at cost price.

The Receivers have undertaken these adjustments, and produced Valuation Notices for most Beneficiaries.

The Court Orders establish a framework for Beneficiaries to access, review, and confirm or dispute their Valuation Notice.

• Update to Trustees and Beneficiaries – 23 October 2024

• Court Orders dated 29 October 2024

• Twelfth Smith Affidavit

Beneficiaries are required to undergo an identity verification process before being given access to their Valuation Notice. Once access has been given, Beneficiaries can accept or dispute their Valuation Notice.

If you have not yet completed your identity verification, please do so as soon as possible or contact the Receivers as soon as possible at BriteAdvisorsIdentification@mcgrathnicol.com.

A small amount of Valuation Notices have been withheld. The Receivers have written to all Beneficiaries whose Valuation Notices have been withheld to explain why that is the case. If you have not yet received access to your Valuation Notice and have not otherwise received any communication from the Receivers relating to reasons why your Valuation Notice may have been withheld, please contact the Receivers as soon as possible at BriteAdvisorsValuation@mcgrathnicol.com.

It is important to note that the value of a Beneficiary's Client AuM set out in their Valuation Notice is not the amount that the Receivers propose to distribute to the Beneficiary from the Client AuM. The Valuation Notice sets out the value of the assets that Brite Advisors ought to have held on behalf of the relevant Beneficiary as at 13 December 2023. The final distribution amount will be calculated as proposed in the Explanatory Memorandum and by reference to the Valuation Notice. Beneficiaries and Corporate Trustees have the opportunity to provide feedback and ask questions in relation to the proposed method of distribution as detailed in FAQ 26.

For various reasons stated in previous reports, including the variance in the Client Assets under Management (Client AuM), the comingled nature of Client AuM held by Brite Advisors and limited company records and access to Brite Advisors’ systems, the Receivers at present are unable to provide transaction histories and valuations other than as at 13 December 2023.

• Explanatory Memorandum dated 4 December 2024: Distribution to Beneficiaries of Brite Advisors

The Explanatory Memorandum explains how the Receivers propose to distribute the Client AuM. Beneficiaries and Corporate Trustees were encouraged to read the document carefully, consider how it impacts them, seek appropriate legal and financial advice, and provide any feedback they may wish to provide to the Receivers (Consultation Period).

The Consultation Period concluded on 31 January 2025.

The Receivers are proposing that the distribution be made as follows.

1. Beneficiaries will fall into six different categories, which will determine what pool of assets they are entitled to claim against, and how their distribution will be determined. Some Beneficiaries may have claims in multiple categories.

2. Certain assets will be liquidated and pooled into a single fund, which is referred to as the ‘Deficient Mixed Fund’ in the Explanatory Memorandum at section 2.1.2, but includes all securities held on the Interactive Brokers Platform. Certain specific holdings, identified at (3) and (4) below, are excluded from the Deficient Mixed Fund. Those Beneficiaries with an entitlement to the Deficient Mixed Fund, will be distributed a share of these funds, net of the Receivers’ fees, costs and expenses (see section 3.3.17 of the Explanatory Memorandum) and any other amounts that the Court orders be withheld (including, for example, certain tax liabilities - see section 4.5 of the Explanatory Memorandum), proportionate to the value of their entitlement, which will have been confirmed in the Beneficiaries’ Valuation Notice. The effect of this is that these Beneficiaries will share equally in the shortfall.

3. Where Beneficiaries deposited cash into Brite Advisors’ bank account on or after 16 October 2023 and those funds were not transferred to the Interactive Brokers Platform, that cash and any interest earned will be returned to those Beneficiaries. A fee representing a proportionate share of fees, costs and expenses of the Receivers for their work in relation to those assets (along with any tax or other liability linked with the assets) will be payable by the Beneficiary or deductible from their distribution.

4. All structured notes held on the Moventum Platform in the GBP and USD accounts, as well as the cash proceeds of those notes, will be transferred back to the relevant Beneficiaries. A fee representing a proportionate share of fees, costs and expenses of the Receivers for their work in relation to the Moventum Platform Assets (along with any tax or other liability linked with the assets) will be payable by the Beneficiary / deductible from their distribution.

5. Any Beneficiary who held Minerva Notes as at 13 December 2023 will hold no rights to those notes and will instead have an entitlement to the Deficient Mixed Fund equal to the funds provided by the Beneficiaries to Brite Advisors to purchase those notes. Any recoveries relating to the Minerva Notes will be contributed to the Deficient Mixed Fund.

The total amount of each Beneficiary’s pension withdrawals received after 13 December 2023 (if applicable) will then be deducted from that Beneficiary’s distribution.

The Receivers wrote to individual Beneficiaries separately to advise which category or categories of Beneficiary you fell into, as set out in Appendix A of the Explanatory Memorandum.

Surrender Rebates and Interest Earned

There have been several developments in relation to the Surrender Rebate and interest disputes over the last few months, which are summarised below:

• The Receivers advised Beneficiaries that their dispute in relation to (i) the offset of Surrender Rebates and (ii) the application of interest is not well-founded.

• Noting that Surrender Rebate and interest disputes had been raised by a number of Beneficiaries, the Receivers decided to proactively bring the Surrender Rebate and interest position and disputes raised to the Court’s attention in the first instance, with a view to streamlining the process and avoiding the need for multiple Beneficiaries applying to the Court to be heard in relation to their dispute. The Receivers intended to seek orders to confirm that the Receivers are entitled to deduct the Surrender Rebate as proposed at a hearing on 19 February 2025.

• The Receivers did not ultimately seek those orders in relation to the Surender Rebate and interest disputes, in view of (i) feedback received from certain Beneficiaries and advisors which we needed time to consider, and (ii) a suggestion from ASIC that beneficiaries needed further time to consider the matter after the Receivers clarified ASIC’s role in the matter.

Having considered all feedback provided to date, the Receivers’ view in relation to Surrender Rebates and interest has not changed and is as follows:

• The Receivers remain of the view that the appropriate way to deal with the Surrender Rebates is for Surrender Rebates to be set-off against the positive value of the Beneficiaries' investments in calculating their entitlements. The Receivers reasoning for this will be outlined in detail in the Receivers’ Supplementary Explanatory Memorandum. The primary reasons why the Receivers remain of this view is due to both (i) the legal position supporting the ability of for the Surrender Rebates to be set-off, and (ii) the impact of the alternative, which would be for the burden of circa USD $16.7m of Surrender Rebates owing to Brite Advisors being borne by the entire Beneficiary population in proportion.

• The Receivers remain of the view that it is not appropriate to credit interest in Beneficiaries’ portfolio. Their reasoning for this is outlined in detail at paragraph 54 to 62 of the Sixteenth Smith Affidavit (located, Filed by Receivers, Sixteenth Affidavit of Linda Methven Smith affirmed on 11 February 2025). The primary reasons why the Receivers remain of this view is due to both (i) no Beneficiaries have been paid interest on their cash holdings in the 13 December 2023 date at all (that is, all Beneficiaries are treated equally in not being credited interest), and (ii) no Beneficiary has identified a written entitlement, contractual or otherwise to be paid interest on their cash holdings. Finally, if interest was credited on all Beneficiaries’ cash positions, it would be a costly exercise for the Receivers and have the effect of increasing all Beneficiaries’ portfolios (albeit in different proportions).

The Receivers must take steps to resolve this matter in a cost effective and fair manner. Accordingly, we do not intend to seek separate orders from the Court on this matter, unless requested by one or more of the Beneficiaries who have raised disputes. We will write to the Beneficiaries who have raised these disputes directly in relation to this matter.

Supplementary Explanatory Memorandum

On 26 February 2025, the Receivers filed an application seeking a short extension of time to file their application for orders and directions relating to the distribution of the Trust Assets (comprising the proposed distribution orders and Supplemental Explanatory Memorandum) (Distribution Methodology Application). Refer to FAQ 6 and 26 further details.

The orders sought by the Receivers were made by his Honour Justice O’Sullivan on 3 March 2025 (March Orders).

The purpose of the extension of time is to allow the Receivers sufficient time to consider and respond to feedback received from the Corporate Trustees, Beneficiaries and other stakeholders on the Explanatory Memorandum during the Consultation Period and, where appropriate, incorporate any changes to the proposed distribution methodology with the full benefit of that feedback.

How will I receive my distribution?

The distribution will not be made all at once. Rather, it is proposed that an amount (yet to be determined) will be retained to cover potential liabilities and ongoing costs for matters that have not been resolved at the time of the first distribution.

Those Beneficiaries receiving notes transferred from the Moventum Platform will receive these instruments in specie (or cash if the notes have reached maturity). Otherwise, all other Beneficiaries' distribution will be made to their Corporate Trustee (where they have one) in the currency in which their account with Brite Advisors was denominated.

Are there any alternatives to the Receivers Proposal?

You should refer to section 5 of the Explanatory Memorandum for details. The Receivers have considered alternate approaches to the method of determining and making the distribution. The Receivers have developed the proposal set out in the Explanatory Memorandum having regard to (i) the legal principles which apply to such a distribution, and (ii) prioritising a timely and efficient return of funds to Beneficiaries.

What role will the Corporate Trustees play in the distribution process?

Where a Beneficiary has a Corporate Trustee, the Receivers propose to make the distribution payment as applicable, to that Corporate Trustee.

In addition, the Receivers have decided to not seek any order which permits a Beneficiary to delay payments being made to their Corporate Trustee. Instead, the Receivers will seek amendment of the Asset Preservation Orders, and a direction that they can comply with a jointly issued payment direction in an approved form, to remove any barriers to Beneficiaries changing their Corporate Trustee.

This proposal reflects the Receivers’ position that the substitution of Corporate Trustees is a matter for Beneficiaries and Corporate Trustees and is intended to remove any barriers to Corporate Trustees and Beneficiaries undertaking this process themselves in accordance with the relevant pension regime.

As a general rule, either the trustee or the beneficiaries are liable for tax on the income of a trust and a receiver or liquidator will be liable for the taxation liabilities of a trustee company to which they have been appointed.

If the Receivers are or will be liable for (i) any tax liabilities as a result of liquidating the Client AuM and making distributions to Corporate Trustees and Beneficiaries or (ii) liabilities arising from Brite Advisors’ historical operations, the Receivers will either retain an appropriate amount from the Client AuM to cover those liabilities or deduct the amount from distributions to Corporate Trustees or Beneficiaries.

The Receivers have engaged appropriate international tax and legal advisers, to advise on the potential taxation consequences of the proposed distribution including engaging with the Australian Taxation Office and intend to seek directions from the Court as and when required.

• Explanatory Memorandum dated 4 December 2024: Distribution to Beneficiaries of Brite Advisors

Upon the conclusion of the Consultation Period, the Receivers are considering all feedback on the proposed distribution provided by Corporate Trustees and Beneficiaries, as well as any other person claiming to have a legal or equitable interest in the Client AuM.

On 26 February 2025, the Receivers filed an application seeking a short extension of time to file their application for orders and directions relating to the distribution of the Trust Assets (comprising the proposed distribution orders and Supplemental Explanatory Memorandum) (Distribution Methodology Application).

The orders sought by the Receivers were made by his Honour Justice O’Sullivan on 3 March 2025 (March Orders).

The purpose of the extension of time is to allow the Receivers sufficient time to consider and respond to feedback received from the Corporate Trustees, Beneficiaries and other stakeholders on the Explanatory Memorandum during the Consultation Period and, where appropriate, incorporate any changes to the proposed distribution methodology with the full benefit of that feedback.

At the time the Distribution Methodology Application is published, the Receivers will provide notice that any Corporate Trustee, Beneficiary or other person asserting an interest in the Trust Assets may apply to the Court in these proceedings for leave to be heard as an interested party on the Distribution Methodology Application.

No hearing of the Distribution Methodology Application has been listed at this stage. That will occur after any applications for leave to be heard as an interested party are heard and determined by his Honour.

• Receivers and Managers' Report dated 9 August 2024 (Fourth Report)

• Update to Trustees and Beneficiaries - 24 February 2025;

• Update to Beneficiary and Trustees - 6 March 2025

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

As Beneficiaries are aware, Brite Advisors’ custom built SalesForce platform and all relevant Beneficiary portfolio reporting data and documentation was inadvertently deleted by SalesForce in late April 2024. Since then, the Receivers have been working with SalesForce to rebuild the SalesForce org utilising back up data.

The SalesForce rebuild completed in early-September 2024. The Receivers are now working through the verification of the Beneficiary data to ensure that the data, documentation and SalesForce environment to be made available to all beneficiaries is accurate and functional.

• Update to Trustees and Beneficiaries – 20 May 2024

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.

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.

The Receivers have received correspondence from several Beneficiaries indicating concern regarding their Trustee's independence or connection with Brite Group entities or associates. The Receivers maintain the position that the relationship between Beneficiaries and Corporate Trustees is a matter for them, and that the Beneficiaries who have concerns about their Corporate Trustee should seek their own advice and take steps to address that concern as appropriate.

Refer to FAQ 24 which provides further details as to what role Corporate Trustees will play in the distribution process.

The Receivers are aware of the CSLR scheme and have been considering the availability of this scheme to the Beneficiaries of Brite Advisors. The eligibility criteria to access the CSLR scheme, and the interaction between administration of the CSLR scheme and the distribution of the Client AuM within the Federal Court Proceedings, are complex matters which the Receivers are currently working through with their legal advisers and the Australian regulators.

The Receivers intend to provide a fulsome update to beneficiaries as to the CSLR / AFCA issues in due course.

The Receivers have received correspondence from a number of US resident Beneficiaries, requesting information in order to complete their US tax return.

The Receivers are unable to provide any asset valuation, noting the factors previously advised, including but not limited to (i) the comingled nature of Client Assets under Management (Client AuM) held by Brite Advisors, (ii) limited company records and access to Brite Advisors’ systems, and (iii) the variance in the Client AuM that the Receivers have identified and that the quantum of the shortfall varies with time and may materially change due to a number of factors.

It should be noted that the Valuation Notice as at 13 December 2023 available to Beneficiaries via the Salesforce portal (for those Beneficiaries who have completed the identity verification process), sets out the value of the assets that Brite Advisors represented it held on your behalf as at 13 December 2023. It is not a valuation of the assets that are in fact held by Brite on your behalf nor is it the amount that the Receivers propose to distribute to you from the Client AuM.

Beneficiaries’ Valuation Notice as at 13 December 2023 and associated transaction report is able to be downloaded from Salesforce to enable you to provide it to your tax advisor if required. The option to download data is shown at section 4 of the Salesforce user guide, available here, which outlines that this is available to each beneficiary by clicking on the “printable view” icon.

The Receivers recommend that you obtain your own tax advice.

• Appendix 3 – Salesforce User Guide

The Receivers created this FAQ to help clarify some of the common questions and themes that arose from the Feedback on the Explanatory Memorandum dated 4 December 2024.

All feedback on the Receivers' proposed distribution methodology is being considered by the Receivers and will be responded to in the supplementary explanatory memorandum, to be lodged with the Courts on 25 March 2025.  That document will also explain any changes that the Receivers have made to the proposed distribution methodology as a result of that feedback or their further work since the Receivers and Managers’ Explanatory Memorandum was published.

FAQ on Explanatory Memorandum Feedback