Bergers Securities undertakes to repay investors

News release

28 October 2003

Bergers Securities undertakes to repay investors

People who bought shares in United States companies from Bergers Securities Limited (in Liquidation) can get their money back.

“The Commission’s investigation into this scheme has produced a good result for investors,” Securities Commission General Counsel Liam Mason said today.

The money will be repaid under an enforceable undertaking accepted by the Securities Commission today.

The Commission has accepted undertakings from Clinton Lee Braude, the director of Bergers Securities, and Benjamin Jean Mauerberger, the original shareholder of the company. The Commission’s investigation into Bergers Securities is complete.

Braude and Mauerberger have undertaken to repay the full purchase price, including any commission, to each New Zealand investor who bought shares in United States companies from Bergers Securities.

The undertaking is enforceable in the High Court.

Bergers Securities sold shares in United States companies through personal contacts and by cold calling people on a telephone list obtained from a commercial phone list provider.

Solicitors for Braude and Mauerberger will write to investors in the next week offering to repay them the full purchase price of the shares, including any commission, in exchange for the shares held by the investor. Braude’s solicitors have confirmed to the Commission that he has deposited funds into a trust account to repay all investors.

“We urge investors to respond promptly to this letter,” Liam Mason said.

Under the Court-enforceable undertaking Braude and Mauerberger have also pledged not to:

- act as a director of a New Zealand company;
- act as an investment adviser in New Zealand;
- act as an investment broker in New Zealand

for a period of seven years.

The Commission investigated the company late last year after a request from Australian authorities for information about the company and another sharebroking company owned by Mauerberger, Mauer-Swisse Securities Limited.

An interim liquidator was appointed in May this year and in June the company was placed in liquidation.

The Commission was concerned that
- the offers of shares required, but did not have, an investment statement and registered prospectus;
- the company itself did not have a registered prospectus and investment statement which it required as an issuer of securities;
- offering the securities was likely to be a breach of the Securities Act and the allotments were likely to be void under New Zealand law;
- the manner in which the shares were represented to people was misleading and likely to breach the Securities Act; and
- the company was likely to have breached the disclosures about handling investors’ money required under the Investment Advisers (Disclosure) Act.

The Commission sought information from overseas authorities in the course of its investigation.

This was challenged by Braude and Mauerberger in the High Count in Wellington. These proceedings were settled and the Commission continued its investigation. This has now resulted in the parties signing the enforceable undertaking to repay investors.

Bergers Securities Limited remains in liquidation. The liquidator is Anthony McCullagh of Auckland. The Commission acknowledges the assistance of the liquidator with its inquiry.

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