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Pegasus Markets and director found guilty of abusing FSPR

Page last updated: 11 Sep 2020

Media Release
MR No. 2020 – 32
11 September 2020

Pegasus Markets Ltd and its New Zealand-based director, Michael Reps, have been found guilty of all criminal charges brought by the Financial Markets Authority (FMA) for breaches to the Financial Service Providers (Registration and Dispute Resolution) Act (FSP Act).

The FMA charged Pegasus and Mr Reps after the company stated on two different websites that it was registered on the Financial Service Providers Register (FSPR), despite it being deregistered. Pegasus was subsequently warned by the Companies Office about the misleading statements but did not remove the statements.

In the North Shore District Court, Judge Jelas found Pegasus guilty of two charges of breaching section 12 of the FSP Act, which states that no one can purport to hold out as registered on the FSPR unless they are registered on the FSPR and a member of an approved dispute resolution scheme.

New Zealand-based Mr Reps was also found guilty of breaching section 40, for knowingly failing to prevent Pegasus from committing an offence under the Act.

Each charge for breaching section 12 of the FSP Act carries a maximum fine of $300,000 for a company and a maximum penalty of either a $100,000 fine and/or 12 months’ imprisonment for an individual.

Pegasus and Mr Reps will be sentenced on 6 November 2020.

The FMA will comment further on the case after sentencing.

Registration on the FSPR does not necessarily mean that an entity is regulated by the FMA. However, individuals and businesses have sought to use registration as a way to establish legitimacy, and then use this to target overseas investors, exploiting New Zealand’s reputation as a well-regulated country.

The FMA has used its powers under the FSPR Act to direct the Registrar to deregister companies from the FSPR.

Other prosecutions the FMA has pursued in relation to businesses or individuals purporting to be registered on the FSPR include Morgan DeVere Corporate Finance Limited (fined $40,000) and Garry James Patterson (sentenced to 200 hours’ community work and 3 months’ community detention).

ENDS 

Media contacts:

Andrew Park
FMA Media Relations Manager
andrew.park@fma.govt.nz
021 220 6770

Campbell Gibson
FMA Senior Adviser, Media Relations
campbell.gibson@fma.govt.nz
021 945 323