Huljich faces criminal charges
The Securities Commission has confirmed it has laid criminal charges against Huljich Wealth Management director Peter Huljich over KiwiSaver.
Thursday, November 18th 2010, 12:43PM 7 Comments
The charges relate to the Huljich KiwiSaver Scheme promoted by Huljich Wealth Management and Peter Huljich.
The Commission alleges Peter Huljich and Huljich Wealth Management misled prospective investors by misrepresenting the investment performance of the scheme's funds in offer documents.
The documents contained graphs comparing the Huljich KiwiSaver Funds' investment performance to other competitor KiwiSaver funds but failed to disclose that the Huljich figures included related party payments made at the direction of Peter Huljich.
Those payments made a significant impact on the Huljich KiwiSaver Funds' investment performance figures.
The Commission also alleges Peter Huljich made untrue statements in the scheme's registered prospectuses which included summary financial performance information but failed to disclose the related party payments.
Criminal charges have been laid summarily under section 58(3) of the Securities Act 1978 which carries a maximum penalty of three months imprisonment or a $300,000 fine and under section 59(1)(c) of the Securities Act 1978 which carries a maximum penalty of a fine of $300,000.
The first call of the charges will be in the Auckland District Court on January 14 2011.
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Comments from our readers
My only negative would be the absence of penalties for the other Hujich Directors.
Does this mean that Asset Magazine is going to stop running ads for the Huljich KiwiSaver scheme? Not a good look for your mag when the name has such bad press...
As capital was injected into the funds the published Huljich performance figures were not based on investment acumen. Hence any any promotion of the synthetic returns should be misrepresentation. However, if I read the statement correctly the act of injecting capital into funds to prop up returns seems legal and is only misrepresentation if not disclosed!!This could set a bad precedent
I say if capital is injected into funds they should be EXCLUDED from any fund returns.
This Huljich act is most likely one of ignorance rather than mischief. Nevertheless all of the Directors must be held accountable by the Regulator, with each Huljich Director forced to declare either conspiring to assist, or ignorance of the rules. In the case of the latter, the Director should be forced to resign Directorships from any financial related entities for a meaningful period.
In the same vein, the industry must step up and take this event more seriously. The NZ financial services industry is at a significant credibility juncture whereby consumers are seeking reassurance that their hard earned investments are going to be looked after.
I suspect that the specific challenge is that the Huljich event is indicative of the many Kiwisaver providers who are currently operating these products at a loss (just do the maths to figure this bit out), without proper operations, or simply unaware of their fiduciary duty to their investors. Unless checked, the issue will compound in significance as affected Kiwisaver balances get larger.
Regulators need to go hard with any perpetrators now (whether their actions were innocent mistakes, or otherwise) or prepare for larger consequences further down the track.
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If it is the former - then I would think a few people are having a look at their own ads at the moment. Rebecca Thomas' angle in the SST recently was that there are a number of potential ways in which fund managers could (and did) make their returns look flasher in their promotional material.