Commission accepts enforceable undertaking
3 December 2004
Securities Commission accepts enforceable undertaking from Momentum Magazine Group Limited
The Securities Commission has accepted an enforceable undertaking from Momentum Magazine Group Limited and its directors.
The company has undertaken not to make further use of the offer documents for its recent share offer, and to ensure that documents for any future offers comply with the law.
The Commission believed the investment statement and the advertisements for the offer did not comply with the law, and were likely to mislead, deceive, or confuse prospective investors.
The investment statement was inconsistent with the registered prospectus. In particular, it referred to “forecast” financial information, whereas the prospectus contained projections.
Projections are prepared on a different basis from forecasts and are inherently more uncertain. Forecasts reflect the most probable outcome, while projections reflect a range of possible outcomes. The Commission considered that investors may have been misled or confused about the degree of reliance they could reasonably place on the prospective financial information in the investment statement and the advertisements.
The enforceable undertaking follows a decision by the Commission on 2 November 2004 to prohibit distribution of advertisements for the offer. The advertising also included references to “forecasts” rather than projections. In addition, one advertisement did not refer to an investment statement, as is required by law.
On 2 November the Commission also gave the company notice of a meeting to consider whether to prohibit the distribution of the investment statement. This meeting, however, did not take place as the offer closed undersubscribed and was withdrawn. The company has told the Commission that all subscriptions have been refunded.
The enforceable undertaking can be viewed on the Commission’s website www.sec-com.govt.nz.