MR No. 2017 –25
8 June 2017
The High Court has dismissed an appeal by Innovative Securities Limited (Innovative Securities) against the Financial Markets Authority’s (FMA) decision to direct Companies Office, as the registrar of the Financial Services Provider Register (FSPR), to de-register the company from the FSPR.
In his judgment, Moore J states that “the criticisms of the processes and reasoning of the FMA in determining that Innovative Securities should be de-registered cannot be sustained…the FMA was correct to determine that the registration of Innovative Securities is or is likely to create a false or misleading appearance that it is an FSP in New Zealand.”
The judgment can be found here.
Nick Kynoch, FMA General Counsel said, “This decision is consistent with previous judgements on these issues. The decision gives us certainty about how we can use our powers to direct the registrar to de-register companies that have no place on the FSPR. Companies that are obtaining registration unnecessarily and for inappropriate purposes, and their advisers, should be under no doubt about how the law operates and the extent of the FMA’s powers.”
The case is the third appeal against the FMA’s decision to direct deregistration from the FSPR.
The High Court dismissed the appeals brought by Excelsior Markets Limited and Innovative Securities. The High Court granted the appeal of Vivier & Company Limited, but this was overturned in the Court of Appeal. No further appeals are currently scheduled.
The fact of registration on the FSPR does not necessarily mean that a firm is regulated by the FMA.
Since 2014, the FMA has had the power to direct the registrar to deregister a company from the Financial Services Providers Register where the registration is likely to create a false or misleading impression that the company provides financial services in New Zealand, that it is regulated in New Zealand or the company’s registration otherwise damages the integrity or reputation of New Zealand’s financial markets.
Since July 2014, the FMA has considered 198 FSP registrations. 110 were existing registrations and 88 were new registrations. In that time, the FMA directed the registrar to deregister 68 companies, with a further 21 companies voluntarily deregistering. In 15 cases the FMA took no action, while the registrar deregistered another 6.
The FMA also issued 30 directions to prevent registration on the FSPR, with another 38 applications either voluntarily withdrawn or allowed to expire. Two applications were referred back to the registrar, while 18 entities were allowed to register on the FSPR.
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