Is New FMA Chief the Man to Tame New Zealand’s Wild West?

Is New FMA Chief the Man to Tame New Zealand’s Wild West?

The Ross Asset Management Investors Group welcomes the appointment of Rob Everett as the new Chief Executive of the Financial Markets Authority (FMA).

The NZ capital markets have a global reputation of being the ‘wild west’, having featured scores of collapses, Ponzi’s and other frauds over the past 5 years. The effect on investors has been devastating, and many have fled our capital markets.

The problems for Mr Everett are daunting. He cannot hope to stop all fraud. Even if he closely regulates the financial markets the fraudsters will inevitably find ways to outsmart him as regulator. The markets are complex, especially when investors’ money can be moved all over the world through a myriad of financial channels and instruments.

Regulation that is too tight will hamper the markets, but the current light handed regulatory regime has been disastrous. The FMA ignored warnings years ago that Ross was running a Ponzi scheme, and then they licensed him in a way that encouraged investors to use his services when the FMA had not checked him properly. It now appears the authorities have only done a partial forensic audit of the Ross fraud. It seems a comprehensive forensic audit that might reveal significant money laundering has not even been attempted. Already there has been more acute embarrassment for the authorities, when a large parcel of potentially tainted money in a Ross family trust was discovered by an investigative journalist. What more is there to find Mr Everett?

The victims of financial collapse and fraud in this country face a double whammy when they try to recover their lost savings. The legal position of victims is often poorly defined, and their ability to recover their lost money is also poor. Even in cases of the most blatant fraud, such as the RAM Ponzi, victims receive little direct help from the authorities. In many past fraud cases victims have had to wait years to see only a tiny fraction of their money returned. The victims certainly ask who winds up with the majority of their money, but such questions never seem to get answered.

Mr Everett has his work cut out to restore confidence in our battered financial markets. He won’t ever stop fraud so a primary focus must be to improve the recovery regime for victims who have had their money stolen by fraudsters.
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