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Screenshot of a breaking news alert e-mail from Q2 2017
The Financial Markets Authority (FMA) announced that it has filed criminal charges against a company and its New Zealand-based director for breaching the Financial Service Providers (Registration and Dispute Resolution) Act (FSP Act).
The company is charged with two counts of breaching section 12 of the FSP Act.
The New Zealand-based director is charged with two counts of breaching sections 12 and 40 of the FSP Act.
Section 12 of the FSP Act provides that no person, including a corporation, can hold out that it is in the business of providing a financial service unless it is registered on the FSPR and a member of an approved dispute resolution scheme. Section 40 of the FSP Act covers a director’s liability if he knowingly authorises or knowingly fails to prevent a corporation committing an offence under the Act.
Each charge for breaching section 12 of the FSP Act carries a maximum fine of $300,000 for a company and a maximum penalty of either $100,000 fine and/or 1 year imprisonment for an individual. These charges are the first of their kind under Section 12 of the FSP Act.
The FMA alleges the company continued to hold out on two different websites that it was registered on the Financial Service Providers Register (FSPR) after it had been deregistered and despite subsequent warnings from Companies Office regarding misleading statements on its website as to FSPR registration.
Karen Chang, FMA Head of Enforcement said:
The FMA will hold directors of companies to account where the company is in breach of the FSP Act and we’re concerned the FSPR is being abused. Our intention to target directors who encourage or facilitate abuse of the FSPR was set out in our report in September 2017, so a clear warning has been given.
The FSPR has been abused by businesses and individuals who use New Zealand’s reputation as a well-regulated country to target overseas investors. The FMA invests significant time and resources in tackling this problem to protect the legitimacy of New Zealand’s financial services firms.
The FMA’s FSPR report sets out background on its work to tackle abuse of the FSPR.
The charges have been filed in the North Shore District Court.