New Zealand Law Society - Director punished for abuse of financial services providers' register

Director punished for abuse of financial services providers' register

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A New Zealand-based director of Morgan DeVere Corporate Finance Ltd has been sentenced to 75 hours of community service for breaching the Financial Service Providers (Registration and Dispute Resolution) Act 2008. (FSP Act). The Financial Markets Authority (FMA) alleges that the company stated it was registered on the Financial Services Providers Register (FSPR) after it had deregistered.

Director Rene Moorby was charged with one count of breaching sections 12 and 40 of the Act. Mr Moorby, who has worked as a Real Estate agent in Wellington, pleaded guilty at a hearing at Wellington District Court, the FMA says.

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 or she knowingly authorises or fails to prevent a corporation from committing an offence under the Act.

The FMA says Morgan DeVere Corporate Finance Ltd, as a company, has pleaded not guilty to two counts of breaching section 12 of the FSP Act. That case is set for 23 April at Wellington District Court.

The FMA alleges the company continued to state it was registered on the FSPR on its website after it had been deregistered and despite subsequent warnings from the Registrar of Financial Services Providers (Registrar) and the FMA.

“The FSPR has been abused by businesses and individuals who use New Zealand’s reputation as a well-regulated country to target overseas investors. Rene Moorby has been held to account for his role in this,” says Karen Chang, Head of Enforcement at the FMA.

“All companies listed on the FSPR must have a New Zealand or Australian director. Becoming a director brings with it rights and responsibilities. This case shows the FMA will take action to ensure directors understand there are consequences for not meeting these responsibilities.”

This case is one of two, related to abuse of the FSPR, currently before the courts. The case involving Pegasus Markets Ltd and director Michael Reps remains before the North Shore District Court.