Commission whacks another contributory mortgage
The Securities Commission has banned the offer document for a contributory mortgage investment.
Friday, January 4th 2002, 8:41AM
The Securities Commission has prohibited the offer document for Rosetta Terraces Limited contributory mortgage in respect of an apartment development in Raumati, north of Wellington.
The scheme is offered by General Mortgage Limited of Christchurch, a registered contributory mortgage broker.
"The commission acted because the document was likely to mislead investors," commission chairman Jane Diplock says.
"It was misleading about the nature, type and level of risk involved in the investment."
The commission has been concerned about several contributory mortgage schemes which promise high rates of return but do not adequately disclose the risks. It has put out one general warning and removed the directors of one firm.
"In a climate of falling interest rates people who rely on interest for income may be attracted to offers which promise higher than average rates of return," Diplock says.
"No doubt some of these schemes are well managed and promoters ensure that investors know the risk they take," Diplock says. "However others do not disclose the full risk and may mislead investors, often those who can ill afford to lose their money."
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