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Commission to call for disclosure statements

20 February 2008

News Release

Securities Commission to call for disclosure statements of investment advisers and investment brokers

The Securities Commission will be contacting investment advisers and brokers early next month to check their compliance with new investment adviser disclosure laws.

Advisers’ and brokers’ disclosure statements and advertisements must comply with the new disclosure laws from 29 February 2008.

The Commission set up a website ( explaining the effects of the law changes over a year ago. Recently it mailed out more than 5000 copies of the guide New Securities Law for Investment Advisers and Market Participants 2008.

“We expect advisers and brokers to comply with the law as soon as it takes effect on 29 February 2008. Investment advisers and brokers have had plenty of time to prepare new disclosure statements,” Director Primary Markets, Kathryn Rogers said, “The law was passed in October 2006.”

The disclosure statement must be given to a client before any advice is given or any investment money is received. It must give specific information about the adviser, the products they give advice on, and how they get paid.

Advisers’ and brokers’ advertisements for their services must also comply with the new law.

“We first want to know whether each adviser and broker has a disclosure statement as required by the new laws,” Kathryn Rogers said today. “We will then review a sample of the disclosure statements and advertisements for compliance with the new laws. The Commission will take enforcement action in appropriate cases.”

The Commission can take enforcement action against advisers or brokers:
- who do not have a disclosure statement; or
- whose disclosure statement does not contain the required information; or
- whose disclosure statement or advertising is deceptive, misleading or confusing.

The Commission has considerable powers to take actions including orders to prohibit or correct a disclosure statement, or to disclose information, or to temporarily ban an adviser or broker.

It is a criminal offence:
- to not disclose information that the adviser or broker knows should be disclosed;
- to have a misleading, deceptive or confusing disclosure statement or advertisement;
- to contravene an order made by the Commission.

These offences carry fines ranging from $30,000 to $300,000.

An adviser or broker can be banned for up to 10 years if they are convicted of one of these criminal offences, or have consistently contravened the law, or have been banned overseas.


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