The receivers of the company, owned by Wellington AFA David Ross, have raised the possibility of a Ponzi scheme after finding only $10.2 million out of a purported $450 million of client funds so far.

In a sign of the nervousness in the industry about negative publicity from the case, Devon Funds Management has sent a letter to advisers signed by chairman Paul Glass, outlining why Devon investors won’t see a repeat of the Ross collapse.

“With the well-publicised issues surrounding Ross Asset Management (Ross) you may have clients who are concerned about the security of their money in managed funds,” Glass said.

“The details on Ross are still sketchy but there are clear differences between their operation and that of a mainstream fund manager like Devon Funds Management.”

Glass said Devon’s retail funds operate under a prospectus and investment statement, which are lodged the Financial Markets Authority (FMA), while an external Trustee ensures compliance with a fund’s trust deed and offer documents.

He also said no client funds are ever held by Devon; all funds are held on behalf of clients by “highly regarded and secure” external custodians and the funds themselves are audited by PwC.

“As far as we are aware not one of the above client protections were in place at Ross.”

Murray Weatherston said the case had "spooked" other participants in the New Zealand finance industry including advisers and fund managers.

“It’s not good for the industry and not good for any of us that somebody in our industry has purportedly been carrying out such a deception," he said.

“It’s probably causing a lot of people who don’t have their investments in their own names to be questioning that decision.”