Inquiry Into Mortgage Financier & Money Managers
Inquiry Into The Mortgage Financier And Money Managers
The Mortgage Financier Limited and Money Managers Limited have been the subject of a Securities Commission inquiry into the contributory mortgage for a development at 1 Parliament Street, a central Auckland property.
The Securities Commission ordered The Mortgage Financier Limited to cease to act as broker for the mortgage and banned advertisements for the scheme earlier this year.
“Investors were given misleading information about the value of the property in which they were investing, and their money was placed at risk by being paid to the borrower before fundraising was complete,” Chairman Jane Diplock said.
In the Commission’s view:
- the 1 Parliament Street mortgage was offered and managed in breach of the Securities Act 1978, the Securities Regulations 1983, and the Securities Act (Contributory Mortgage) Regulations 1988;
- The Mortgage Financier Limited, as issuer of the mortgage, may be civilly and criminally liable for the breaches under the Securities Act;
- Money Managers Limited acted as a contributory mortgage broker by offering interests in the Parliament Street mortgage for public subscription. It breached the regulations by not being registered as a contributory mortgage broker. It might also be civilly and criminally liable under the Securities Act;
- Money Managers Limited and its associated company Securities Registry Limited were promoters of this offer under securities law. As promoters, these companies might be civilly and criminally liable under the Securities Act;
- the directors of all three companies may also be criminally and civilly liable.
The findings are referred to the Companies Office’s National Enforcement Unit to consider whether to lay criminal charges.
The Commission has recommended that
- contributory mortgage brokers consider taking a more active role in dealing with valuers to ensure that their offer documents comply with the law; and
- the New Zealand Property Institute remind its members of the need to comply with the Contributory Mortgage Regulations.
The Commission’s report is available at www.sec-com.govt.nz or by phoning (04) 472 9830 for a hard copy.