Thursday 20th April 2006 1 Comment
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In the District Court at Auckland, Robert Douglas Ross was fined $8,000 and`Ross Investments was fined $16,000 for breaching the Fair Trading Act by making misleading claims.
Between August 2004 and March 2005 Ross Investments wrote to thousands of capital bond and unit holders of two New Zealand companies, Vector and Kiwi Income Property Trust (KIPT). The letters implied that Vector and KIPT were in financial difficulties and that, to dispose of bonds and units that would otherwise be difficult to sell, investors should sell them to Ross Investments.
In fact both Vector and KIPT were in a good financial state, and the price offered by Ross was significantly below market value. Approximately 20 investors took up Ross's offer.
The misleading claims had cost the companies involved, Commerce Commission Director of Fair Trading Deborah Battell says, with
Vector and KIPT spending an estimated total of $42,000 on contacting shareholders to correct Ross's misleading claims, and on legal advice.
Battell says that Ross had twice been warned by the Commission in 2003 over similar misleading representations. At an interview in 2005, a Commission investigator told Ross that the Commission considered the letter sent to KIPT investors was misleading. Two weeks after the interview, Ross sent a letter making the same claims to hundreds of Vector investors.
"Mr Ross paid the penalty for ignoring Commerce Commission warnings," Battell says. "The Commission hopes this criminal conviction and fine will ensure that Mr Ross finally stops his attempts to mislead New Zealand shareholders."
Battell says that the case was particularly significant because it involved the successful prosecution of an Australian based company and individual in the New Zealand courts.
"While the Commission will take action to stop traders misleading the public," Ms Battell adds, "the best protection for consumers is to seek independent financial advice when considering investment options."
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