One Management

Background

In March–May 2022, the Financial Markets Authority (FMA) took regulatory action against The One Management GP Limited in relation to an offer of units in The One Property LP / Longhorn Partnership Fund (the Fund), which was marketed exclusively to wholesale investors, including eligible investors.

Regulatory Action

• In March 2022, the FMA issued an interim stop order against The One Management GP Limited and James Law Realty Limited, an entity involved in promoting the Fund
• In May 2022, following further assessment, the FMA issued a full stop order against The One Management GP Limited, which came into force on 10 May 2022 and applies indefinitely to certain conduct.

FMA Concerns

The FMA determined that communications and promotional materials relating to the Fund were likely to mislead or confuse prospective investors, including wholesale investors, particularly regarding:

• Investment risk: Promotional materials portrayed the investment as low risk, despite the FMA’s view that investors faced significant risk and that cited protections provided little or no effective protection.
• Guarantees: References to guarantees from Tung Wei Ling and Manna Wang were considered misleading, as the guarantees were temporary, could terminate before repayment, and were unlikely to protect investors in the event of default.
• Security over assets: Statements regarding a mortgage over land securing the Fund’s advances were misleading, as such security would not be in place at the time of initial drawdowns.
• Use of group assets: The offer implied that guarantees were supported by the assets of The One Property Group Holdings Limited, including references to a BDO letter estimating net assets of $22.5 million. The FMA concluded these assets were not at risk under the personal guarantees, undermining their relevance and investor protection value.
• Returns disclosure: Promotional materials prominently advertised a “50% fixed return” over three years, which the FMA considered misleading without clear explanation, as this equates to a materially lower annualised return when properly calculated. The FMA emphasised that failure to present annualised returns reduces comparability with other investments and is likely to mislead.

Consequences of the Stop Order

Under the full stop order, The One Management GP Limited is:

• Indefinitely prohibited from distributing any restricted communications (including websites, social media, sponsored content, and billboards) relating to the Fund.
• Temporarily prohibited, for two months until 10 July 2022, from:
  • making or facilitating offers or sales of units,
  • accepting applications for units, and
  • accepting further investments or deposits into the Fund.

James Law Realty Limited was separately prohibited, under the interim order, from distributing promotional communications relating to the Fund.

Purpose and Regulatory Rationale

The FMA stated that the stop order was intended to protect investor interests while avoiding disproportionate restrictions on the entity’s ability to raise capital in the future, provided it does so in compliance with financial markets legislation.