Are FMA Regs the Answer to NZ's Woeful Investment Record?

MEDIA RELEASE
Ross Asset Management (RAM) Investors Group

Government Increases Financial Market Regulation – But Is It the Answer to New Zealand’s Woeful Investment Record?

Tomorrow, Monday 1 December, Phase II of the Financial Markets Conduct Act 2013 (FMCA) will bring into effect major new regulations in New Zealand’s capital markets and financial services law.

“We hope these changes will help to restore some investor confidence in New Zealand’s battered financial markets, but we do expect they will have a significant impact. Further, the government’s current regulatory efforts seem to ignore key areas that require more urgent attention,” says Bruce Tichbon, spokesperson for the Ross Asset Management Investors Group.

“Similar legislation to the FMCA has been in place for years in other countries, such as the Sarbanes Oxley Act 2002 in the USA, but that legislation failed to detect the huge Madoff Ponzi or prevent the Global Financial Crisis that globally wiped out the savings of millions of small investors, widows and retired couples.

“While we would like to wish the Financial Markets Authority success in their efforts to improve the markets, the facts are that financial markets are so complicated and fluid that it is nigh impossible to stop collapses and fraud. Overseas experience shows that tighter regulation has not been effective in stopping fraudsters; it only tends to modify the methods by which they commit fraud.

“Public confidence in the NZ financial markets is an incredibly low 59%, after 171,000 NZ investors lost approximately $6 billion following the recent Global Financial Crisis. Many NZ investors have retreated into property, helping to create a massive property bubble that sees our national annual increase in residential property values nearly match the total value of the NZ share market (currently worth $93.3 billion).

“The government’s latest regulatory efforts with the Financial Markets Conduct Act appear to address the wrong problems. Urgent action is needed to protect investor property rights and give investors better hope of recovering stolen money. Currently investors can only expect pitiful recoveries after being the victims of white collar fraud. NZ is nearly 50 years behind the USA with appropriate legislation, which in the USA is seeing the victims of the Madoff Ponzi in line to recover virtually all of their stolen money.

“We call on the government to take realistic measures to restore our moribund financial markets, and convince investors they won’t have undue risk of being ripped off yet again” concluded Tichbon.

ENDS

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