New Zealand Shareholders Association Chairman John Hawkins said today that people would continue to be caught up in investment company collapses unless the government made some changes to the Financal Markets Conduct Bill now before the House. He was speaking in the wake of the Ross Asset Management debacle, something he said could be similar in scale to the Madoff ponzi scheme in the USA after adjusting for the size of the capital markets.
Hawkins said that for some reason, politicians and officials seemed to believe that because someone invested $500,000, they were financial experts, something that is patently nonsense in the Associations view. As both existing and the proposed law stands, these people are effectively buy xenical online canadian automatically opted out of the normal investment disclosure requirements which the Association think is ridiculous. He said the Association was promoting an active opt out arrangement whereby all investors would be required to complete a certificate indicating they understood the protections they were giving up before investing in schemes that did not provide full documentation such as prospectuses.
This “pause and consider” approach should cause wealthy but non expert investors to think more about their actions while not creating an unreasonable a barrier for true experts, he said, adding that this approach would not be a cost burden for smaller issuers or closely related parties who were concerned at the potential expense of providing full disclosure documentation.
Hawkins said that the average client of Ross Asset Management had more than $500,000 invested and may have been excluded from receiving comprehensive disclosure. If they had that information, it may have affected their decision to place money with the company.
Currently, a lot of people end up with large sums to invest following the sale of property, but in time we will have many more cashing in big amounts from KiwiSaver. It is essential that hard working people, who may have little or no
investment skills themselves, are protected. Legislation needs to be put in place now, rather than trying to paper over the cracks after some future disaster, he said.
Hawkins said the NZSA was appalled that companies like Ross Asset Management who accepted funds from the public apparently did not have to have their accounts fully audited. This is entirely unacceptable and if true, we expect the government to correct this anomaly as a matter of urgency.
He added that no amount of legislation or regulation could ever prevent determined fraudsters, but the Association finds it frustrating that some simple, practical and cost effective protections are proving so hard to have adopted.