19 September 2025

Court case provides clarity around wholesale investor rules

Media Release  
MR No. 2025 – 38

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko – has welcomed the clarity provided by a High Court ruling on the rules qualifying “eligible investors” as wholesale.

The FMA sought clarification from the High Court on the interpretation of the eligible investor exclusion under the Financial Markets Conduct Act in respect of the use, confirmation, and acceptance, of eligible investor certificates in the wholesale investment sector. 

Wholesale investment offers can promise attractive returns but don’t have the same protections of regulated offers such as retail investment offers. Wholesale investment offers are aimed at experienced investors, often with large sums of money to invest.

Eligible investors are a group of wholesale investors who must certify that they have the appropriate experience to invest in wholesale offers. The certificates they provide must be confirmed by an accountant, lawyer, or financial adviser.

FMA Chief Executive, Samantha Barrass said: “We welcome the Court’s findings, which provide clarity on how the law should be interpreted.”

In respect of the questions before the Court about the approach to eligible investor certificates the Court found:

An eligible investor certificate must state the grounds for certification but need not detail sufficient investment experience in order to be valid, provided the grounds are not incapable of supporting the certification.
An offeror must be satisfied that the eligible investor certificate is valid. However, where the certificate has confirmation from a financial adviser, lawyer or accountant, the offeror may rely on that as confirming the investor has sufficient investment experience to participate in the offer. An offeror is not required to assess the investor’s actual ability to evaluate the investment or the adequacy of the grounds stated by the investor in the certificate.
The Court confirmed that if an offeror could not rely on the eligible investor certificate, disclosure must be made as a retail offer, unless the investor is otherwise classified as a wholesale investor.

“In taking this case stated, our focus was on ensuring confident participation in wholesale markets by offerors and eligible investors,” said Samantha Barrass.  

“In recent years, the FMA has noted an increase in complaints and concerns raised about wholesale offers of financial products, indicating increased investor participation.

“Wholesale investment offers can promise attractive returns but don’t have the same protections of regulated offers such as retail investment offers. Wholesale investment offers are aimed at experienced investors, often with large sums of money to invest.

“This case confirms that there is a responsibility on lawyers, accountants and financial advisers to correctly confirm eligible investor certifications made by investors, and that wholesale offerors are able to rely on those certifications and confirmations. That may include the need for lawyers, accountants and financial advisers to seek further information to determine whether the certification provided by the investor is correct.

“We will continue to work with MBIE on the appropriate policy settings for the wholesale investment regime, given the changing distribution methods and nature of wholesale offers.

“We will also continue to take action against conduct that misleads people into these wholesale investments, when they need the protections afforded by retail investments.

“Tackling retail investments dressed up as wholesale investments is an area of concern we have held for some time and remains strongly on our radar.”

ENDS

Media contact:

Ellie Martel
FMA Senior Adviser, Media Relations
[email protected]
021 241 7868

About wholesale investment:

Who is a 'wholesale' or 'eligible' investor?

Wholesale investors are defined in law and, broadly speaking, are people or organisations who have sufficient previous investing experience that means they don’t require disclosure.

You can either be a wholesale investor for all offers of financial products, or just for a particular offer.

Wholesale investors for all offers of financial products

An investor is a wholesale investor for all offers of financial products if:

they are an investment business (for example, an entity whose main business is investing in financial products, a registered bank, or a financial adviser);
they meet the investment activity criteria specified in law to essentially qualify as a habitual or experienced investor;
they are ‘large’ (the investor has net assets or turnover exceeding $5 million for the last two completed financial years); or
they are a Government Agency.

Wholesale investors for a particular offer of financial products

An investor is a wholesale investor in relation to a particular offer of financial products if:

they are an eligible investor in relation to that offer (see below);
the minimum investment amount payable by the investor is $750,000;
the investment amount, plus any amounts previously invested by the investor for the same financial products from that provider add up to at least $750,000;
it is proposed that the investor will acquire the financial products under a bona fide underwriting or sub-underwriting agreement (typically relevant to investment banks or other financial institutions and not individual investors); or
in relation to an offer of a derivative, the notional value of the derivative is at least $5 million.

Eligible investors

You can self-certify yourself to be an ‘eligible investor’ (which is a type of wholesale investor) in relation to a particular transaction if you have sufficient experience in acquiring or disposing of financial products to be able to assess:

the merits of the transaction
your own information needs in relation to the transaction; and
the adequacy of the information provided by any person involved in the transaction.

That certification requires a financial adviser, a qualified statutory accountant, or a lawyer to sign the certification stating they are satisfied you have been sufficiently advised of the consequences of self-certification and have no other reason to consider the self-certification is incorrect or that further information or investigation is required.

Wholesale investors don't have the same protections as retail investors

The FMA has a range of powers we can use in relation to retail investment offers, and we can intervene where necessary. However, we have little oversight of wholesale investment offers.

Investing in a wholesale offer may mean you:

Do not receive a product disclosure statement (PDS) for the offer. The PDS sets out the key characteristics, risks and features of the investment, in clear, concise and effective language that is aimed at a prudent but non-expert investor. A PDS is not required for wholesale offers.
Are not dealing with a firm licensed by the FMA (this is particularly relevant for offers of managed investment products and derivatives). Licensing gives us the ability to monitor the activities of the firm.
Do not have access to a free independent dispute resolution scheme if things go wrong.
Do not receive information about the investment’s ongoing performance
Won’t have a licensed supervisor (an entity that looks after the interests of investors) in the case of debt securities such as bonds and managed investment schemes.

While offers to wholesale investors are not regulated in the same way as offers to retail investors, the offeror must still comply with ‘fair dealing’ requirements. This means the person making the offer cannot:

engage in misleading or deceptive conduct in relation to the offer
make false or misleading statements in their offer documents or advertising
make unsubstantiated representations.

Enforcement tools:

The FMA has enforcement and other powers available if we become aware of false, misleading, deceptive, or confusing conduct by a firm or where a firm wrongly makes wholesale offers to retail investors or is not registered when it’s required to be.  We may be able to issue a warning, a stop order, or a direction order requiring the firm to take certain steps, such as removing misleading advertisements. Serious breaches may result in us taking court action. 