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

 

Commission bans contributory mortgage broker

News release

19 December 2006

Securities Commission bans contributory mortgage broker

The Securities Commission has banned Contributory Mortgage Investments Ltd (CMI) from acting as contributory mortgage broker for two of its mortgages.

Crichton Horne & Associates Mortgage Brokers Limited has been appointed as contributory mortgage broker for these mortgages.

CMI has also been banned from offering interests in contributory mortgages to the public for four months. During this time the Commission will continue to review CMI’s operations to determine whether any other action should be taken.

The Commission considers CMI breached the Contributory Mortgage Regulations in relation to the two mortgages, which were the Otahuna Property Limited first and second mortgages, by:

• paying investors’ money to the borrower when it ought to have known that the offer document for the Otahuna first mortgage was misleading as it failed to disclose that the security for the first mortgage was limited to a priority amount; and by

• failing to notify investors of the borrower’s default and the action CMI was taking in respect of the default, within a reasonable time.

“CMI has not met the standards of care and good governance expected of those who raise funds from the public. It is in the public interest to prohibit further fundraising until the extent of CMI’s failure to comply with the law is fully established.” Jane Diplock said.

CMI told the Commission about its failure to disclose that the security for the first mortgage was limited to a priority amount and admitted it has a conflict of interest in the continued management of these mortgages. CMI’s failure to disclose to first mortgage investors that their security was limited to a priority amount may give grounds for an action against it by those investors. In these circumstances although CMI proposed steps intended to manage the conflict the Commission considers that the only realistic way to manage a conflict of this nature is for an independent party to represent the interests of investors.

CMI has a history of securities law breaches. In 2004 it was convicted for providing misleading information to investors in relation to a contributory mortgage and for paying investors’ money to a borrower when there were insufficient funds to complete the development for which the money was being lent, events occurring in 2000.

Earlier this year the Commission accepted an enforceable undertaking from CMI in relation to events occurring in 2004 and 2005. The undertaking is available on the Commission’s website at http://www.sec-com.govt.nz.


Ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Commerce Commission: Appeals Record $2.25m Fine In Vodafone FibreX Case

The Commerce Commission has filed an appeal in the High Court against a record $2.25 million fine imposed on Vodafone NZ Limited (Vodafone) for its offending under the Fair Trading Act during its FibreX advertising campaign. While the sentence imposed in the Auckland District Court on April 14 was the largest-ever fine under the Fair Trading Act, the Commission will argue that it is manifestly inadequate... More>>



All District Health Boards: Historic Pay Equity Settlement

An historic agreement has been ratified that addresses a long-standing undervaluation of a workforce that is critical to the smooth running of our hospitals and the delivery of healthcare... More>>


MPI: Dry Autumn In Waikato And South Auckland Leads To Drought Classification Drought conditions affecting the primary sector in the Waikato and South Auckland were today classified as a medium-scale adverse event, enabling a package of support for farmers and growers... More>>


Barfoot & Thompson: Rents Up By Around 3% In Most Areas

The average weekly rent paid for homes in most areas of Auckland has risen by around 3 percent year-on-year. The figures for end March from more than 16,000 properties... More>>


DoC: Smeagol The ‘Gravel Maggot’ Leaves Its Rare Mark On The Remote West Coast
An extremely rare species of sea slug or ‘gravel maggot’ has been detected for the first time on a remote beach in South Westland... More>>



Immigration: Annual Net Migration Loss Of 7,300

The provisional net loss of 7,300 people in the year ended March 2022 was the lowest net migration for a March year since 2012, Stats NZ said today... More>>