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Securities Commission's (New Zealand) investigation findings urge investors to take actions against breachers of Securities Acts


The Securities Commission of New Zealand said that its recently concluded investigations into the finance companies in the country revealed that most of the investors in those companies are entitled to refunds on their investments. In cases where persons and companies had contravened the law by offering securities to the public minus a registered prospectus, investors were entitled to a refund of their principal and the additional interest; the commission revealed in its findings today. Further more, for the investors who did not get an investment statement before investing; they may as well be legible for a refund according to the commission.


The commission further said that the amounts available may be more than the amounts returned on receivership or liquidation and the the viability of any such action would, of course, depend on the financial capability of the issuer or the directors to meet the liability. On that regard, the commission asked investors to take action themselves as the commission is not in a position to do it for them.


Investors were advised to seek legal advice with regard to their entitlements and the prospects of enforcing those particular entitlements. The New Zealand Securities Act requires that an issuer registers a prospectus before it can allot any securities to members of the public. Companies that contravene this act would be required to refund their investors their total sum of investment in the company.


Additionally, the issuer is required to make sure that the investor has received the related investment statement before that particular investor makes a subscription for the offer. As a result of the commission’s investigations, a referral to the Companies Office’s National Enforcement Unit resulted in a successful prosecution of Sharon Day and QED in relation to investment offers to the public by QED that were made without a registered prospectus or investment statement.


The New Zealand enforcement unit had at the same time filed parallel charges against the directors of Five Star Debenture Nominees. Other investigations were still continuing into the other issuers that might have gone against the law in that regard.

The Securities Commission launched the investigations into company breaches of the Issuer Acts after it became apparent that some finance firms were carrying out illegal issuances. The successful prosecution of the two firms is meant to deter any other firms from the outlined breach of law and is geared at protecting New Zealand investors in the companies. Investors now have a go ahead to take action against such companies after the commission’s revealing investigations were made public today.


May 29, 2010.


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