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Warning For Lawyers Giving Investment Advice

LawFuel - The Law Jobs and News Wire


The Commercial Law Committee of Auckland District Law Society is urging all lawyers to be vigilant about complying with the investment adviser disclosure laws that came into force on February 28, 2008.

“All lawyers must be aware that if they give investment advice, they must provide extensive prescribed disclosure before giving that advice and there are significant penalties for non-compliance,” the committee warns.

A committee notice says it is important all members understand: what constitutes an investment adviser, what is investment advice, and the scope of advice that a lawyer can give without contravening the investment adviser disclosure laws contained in the Securities Markets Act 1988 following the repeal of the Investment Advisers (Disclosure) Act 1996.

Under the investment adviser disclosure laws, investment advisers must provide extensive disclosure as prescribed under the act before investment advice is provided.

If investment advice is given without disclosure, then that person and that person’s employer will be liable for significant penalties under the act.

Where a lawyer acts as an investment broker (receiving investment money or property), there is additional disclosure required.

An “investment adviser” is any person who in the course of that person’s business or employment gives “investment advice” and extends to that person’s employer. This potentially catches all staff and therefore the firm of any lawyer.



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