Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Inquiry highlights need for change to adviser law

News Release 13 May 2002


Inquiry highlights need for change to investment adviser law

The need for tighter law relating to investment advisers is highlighted in a report of a Securities Commission inquiry released today, Chairman Jane Diplock said.

The Commission inquired into the offer of securities by Gideon Investments Pty Limited and the role of Morison Guildford Limited of Masterton as investment advisers for the offer.

Gideon was put into liquidation after the death of its managing director Michael Bastion in March 2000. Gideon purported to be a shares, bonds, currency and futures trading fund claiming returns of up to 51.5% per annum.

The liquidator concluded that there had been fraud and that most of the investors’ funds were used to buy property, thoroughbred racehorses and to pay for Bastion’s lifestyle.

The scheme had no prospectus or investment statement as required under New Zealand law.

The Commission has concluded that Morison Guildford actively solicited funds for Gideon as investment advisers. Some A$5 million was raised for Gideon through their office.

“Investment advisers have certain obligations to those who invest on their advice and with their assistance,” Jane Diplock said. “We consider that Morison Guildford’s conduct was incompetent and irresponsible.”

They did not question the lack of offer documents. Their evaluation and monitoring of Gideon was close to non-existent. It fell short of what might reasonably be expected of a firm offering services to the public. They did not keep proper records.
… more …

This case may also be an example of churning - advising excessive turnover of policies to bring in commissions.

The Commission has recently recommended changes to investment adviser law. This case is an example of the type of matters our recommendations are intended to help address.

In particular the events illustrate the value of rules about mandatory investment adviser disclosure and about recommending illegal offers of securities.

The Commission’s report is available from www.sec-com.govt.nz.

… ends …

Contact:

Catherine Chapman
Communications Manager

(04) 471 7659


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Retail: International Websites To Pay GST

New rules would be aimed at imported goods valued at or below $1,000. Customs would retain responsibility for collecting GST on imported parcels valued more than $1,000. More>>

ALSO:

High-Level Advice: PM’s Business Advisory Council Membership Announced

The Prime Minister’s Business Advisory Council brings together a mix of experts, six women and seven men with small to large business experience, from across New Zealand, to provide advice. More>>

ALSO:

Improving: Report Shows New Zealand Air Quality 'Good'

Our air 2018, produced by the Ministry for the Environment and Stats NZ, shows that while some previously known issues persist, progress has been made and levels of some pollutants are declining. More>>

ALSO:

Greenpeace: Govt Extends OMV Exploration Permit

The Government has just granted oil giant OMV a two-year extension to drill in the Great South Basin, despite issuing a ban on new oil and gas exploration permits in April. More>>

ALSO:

Collective Bargaining For Contractors: Working Group's Model For Screen Sector

A recommended model to allow collective bargaining for contractors in the screen sector has today been unveiled by the Government-convened Film Industry Working Group. More>>

ALSO:

Kauri Dieback: DOC Closing Tracks To Protect Trees

The Department of Conservation will close 21 tracks across kauri land to help prevent the spread of kauri dieback. An additional 10 tracks will also be partially closed and the open sections upgraded... More>>