Star wars
FPG Research threatens its rival with legal action.
Monday, April 13th 1998, 12:00AM
FPG Research is objecting strongly to IPAC Securities' star rating system and is intending to take legal action against its rival.Late last year after FPG launched its star ratings system and heard IPAC was developing its own it threatened legal action, and wrote to fund managers asking them not to support the IPAC ratings.
Now IPAC has launched its ratings FPG is intending to proceed with legal action, managing director Graham Rich says in a press statement.
Rich says he has asked IPAC to use a symbol other than a star in its ratings, however IPAC has refused to use something else.
"We therefore have little option but to proceed with legal action," he says.
The two ratings are quite different in that one is straight quantitative measure and the other is a mixture of quantitative and qualitative factors. The only similarity is the use of the ubiquitous star.
FPG says that IPAC's ratings have little value for predicting future performance.
IPAC says its ratings aren't designed for that use. Rather they can be used to see how a fund has performed in the past, compared to its peers, and the ratings should be used in conjunction with IPAC's qualitative research.
Rich says, "many New Zealand investors do not have the time to develop the knowledge needed to recognise the limitiations of a ratings system based on past performance alone."
He also claims IPAC's ratings are deceptive and misleading to investors as they are based on only one tenth of the information used in its model.
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