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


'Low ball’ offers still find takers, despite regulation: FMA

‘Low ball’ offers still find takers, despite regulation, says FMA

By Suze Metherell

March 27 (BusinessDesk) – The Financial Market Authority said complaints about ‘low ball’ unsolicited offers for stocks and bonds have dropped since new regulations last year, but some investors are still accepting deals at discounted rates.

The new regulations to govern how unsolicited offers to investors can be made, including stricter disclosure requirements and imposing minimum offer and cancellation periods, came after a series of deeply discounted offers made by Bernard Whimp were deemed misleading and deceptive by the High Court in 2012.

It was only aware of two companies making unsolicited offers under the new regulations, which require companies to notify the issuer of the security about the approach. Washington Securities and Zero Commission New Zealand began approaching investors last year, said the regulator in its report.

Australia-based Washington has ceased operating in New Zealand, but appeared to have offers to “tens of thousands of investors” within a discounted range between 25 to 75 percent. Owner John Armour had previously drawn the regulator’s ire when his Stock & Share Trading Company attracted a significant number of complaints for ‘low ball’ offers.

The FMA was aware of 521 acceptances of Washington offers, of which 125 acceptances, spread across a range of offers, was estimated at an average total discount of $1,154 on market value. The remaining 396 related to one investment and based on market price averaged a $225 discount per investor.

Since February last year Zero made offers to investors in nine companies, with 1,275 acceptances on offers that were at an average discount rate of 10 percent, or about $45 discounted on market value to each investor, the FMA said.

NZX-listed companies such as Property For Industry, Mainfreight, Heartland New Zealand and Tower have all had investors approached by Washington and Zero, and have warned investors not to accept their offers. Last year Heartland tried to head off low-ball offers to its investor base with a plan to pick up the broking fees for small shareholders who want to sell.

Complaints received by the FMA have dropped to six since the regulation was introduced in December, compared to 22 in the previous three months, the FMA said.

Typically investors are approached by post after the offering company acquires details of a company’s share register from the securities issuer, which it is required to provide on request. Some issuers now put watermarks on their registers to make it more difficult for data to be extracted, FMA said.

The authority said it continues to receive complaints going back several years related to Bernard Whimp and associates.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news