FMA Cracks Down on FSPR Abuse 


Morgan DeVere Corporate Finance has been convicted at the Wellington District Court on two counts of breaching the Financial Services Providers Act 2008 (FSP Act) for falsely claiming it was registered on the Financial Services Providers Register (FSPR), the FMA has confirmed.

The company continued to claim it was registered on the FSPR after it had been deregistered and despite subsequent warnings from the Financial Markets Authority (FMA) and the Registrar of the FSPR.

Section 12 of the FSP Act states that no person, including a corporation, can hold out that it is in the business of providing financial services unless it is registered on the FSPR and a member of an approved dispute resolution scheme.

FMA Head of Enforcement, Karen Chang, said “The FSPR has been abused by businesses and individuals using New Zealand’s reputation as a well-regulated country to target overseas investors.

“Our FSPR report warned we would be stepping up enforcement action against these businesses and those within New Zealand who act as directors to help them. These convictions demonstrate the FMA will continue to act to curb this abuse and enforce the law,” she said.

The FMA stated the judgment included two important points:

  • A company ‘holds out’ when it puts material on its website, regardless of whether the company conducted business in New Zealand or overseas or whether anyone acted on the misrepresentation (Paragraph 16).
  • Whether a director sets out to misrepresent the company’s position from the outset is irrelevant. An offence occurs when a director knowingly allows the misrepresentation to continue (Paragraph 20).

Last month, the New Zealand based director of the company, former Wellington real estate agent Rene Moorby, pleaded guilty to one count of breaching the FSP Act.

A further case related to abuse of the FSPR, involving Pegasus Markets Limited and director Michael Reps, remains before the North Shore District Court.