The Financial Markets Authority (FMA), which inherited 25 "ongoing investigations" into failed finance companies from its Securities Commission predecessor, will hold a media briefing tomorrow to provide an update on the progress of the investigations.
The media briefing, to be held in Auckland, will have both FMA CEO Sean Hughes and FMA chairman Simon Allen in attendance. The briefing is designed to "update the market on the progress of the FMA's finance company investigations," the FMA says.
Among the failed finance companies the FMA is investigating are Hanover Finance, Strategic Finance, South Canterbury Finance, and OPI Pacific Finance, formerly MFS Pacific Finance. (See the full list here on the FMA's website).
More than 60 finance companies and other entities have collapsed since 2006 putting NZ$8.6 billion of investors' money, held in more than 205,900 deposits, on the line. See full details in our Deep Freeze List here.
The FMA was launched in May as part of the government's attempt to restore ma and pa retail investors' confidence in the capital markets. It consolidated the powers and functions of the Securities Commission, some of the functions of the Registrar of Companies and the Government Actuary. See more in this Double Shot interview with Sean Hughes.
Also see Gareth Vaughan's opinion piece: Investor justice in the slow lane.
The FMA eyes 'new era of professionalism'
Meanwhile, the FMA released its enforcement policy late yesterday, which it says will help financial markets participants gain a clearer understanding of the FMA’s role, functions and priorities. See the full enforcement policy here.
“The FMA wants to see a new era of professionalism amongst the country’s executives and directors," Allen said.
"Our clear preference is for compliance over enforcement. Our first recourse will be to comment, to write guidance and reports, to speak to the country through the media and other channels and to make recommendations for law reform. But we also have new powers, including a new ability to seek remedies for poor governance on behalf of shareholders and companies, and we will use these where necessary."
Allen said the FMA would be prepared to use its "full regulatory toolbox" where necessary. This includes bringing criminal prosecutions for serious misconduct, using our power under section 34 of the FMA Act to take action on investors’ behalf, and holding directors, senior executives and advisers accountable where necessary.
"Where appropriate we will require market participants to provide financial compensation for losses sustained due to unlawful conduct."
The issues that will gain the "full force" of the FMA’s scrutiny are those involving large numbers of investors at risk of significant or potential loss, those where there is evidence of intentional unlawful behaviour, and those where there is a need to send a clear regulatory signal to the markets, Allen added.
"Where necessary, the FMA will use its powers to bring test cases that will clarify 'grey areas' of the law.
Protecting the integrity of KiwiSaver is an "obvious priority" because so many New Zealanders (about 1.7 million) are enrolled in the scheme.
"Other priority areas include compliance with new licensing regimes and monitoring of trading on registered securities exchanges. FMA will actively monitor and enforce the boundary between unregulated and regulated activity, particularly in relation to the financial advisers regime," Allen added.
(Update adds detail on the FMA's enforcement policy).