News Round Up

Tuesday, April 13th 2004, 6:52AM

The Securities Commission said last week it had accepted two enforceable undertakings, warned about scams and issued a practice note for directors and officers affected by the market disclosure regime.

The enforceable undertakings were accepted from Asset Finance, and Secure Property Investments and its director M R Alcock.

Asset Finance, based in Whakatane, had been offering securities to the public without a registered prospectus or investment statement. There was no trustee or trust deed as required by law. The company has now registered a prospectus and investment statement and has had to give investors copies of the investment statement along with an option to have their money refunded or reinvested.

Secure Property Investments Limited and M.R. Alcock had been involved in a proportionate ownership scheme for a property at Whangarei.

SPI was the manager and promoter of the scheme, however SPI’s offer document did not comply with the conditions of the class exemption these types of schemes operate under. SPI voluntarily undertook to withdraw the offer document and advertising for the scheme from the market. SPI also undertook to return all application funds that it had received.

The commission also, last week, warned people not to be taken in by follow-up approaches from overseas boiler rooms. “Many New Zealanders have been scammed by overseas callers who have sold them shares which turn out to be worthless,” the commission’s director of enforcement Norman Miller says, “or who have taken the money and not bought any shares at all.”

A list of known boiler room operators is published on the commission’s website.

Share selection crucial

The performance of the New Zealand share market in the first quarter of 2004 meant selecting the right companies and industry sectors was the key to investment success, according to Russell Investment Group.

There was a wide variation in company performance of shares in the NZSX50, ranging from over 20% (Tower and Fisher & Paykel Appliances) to less than -15% (Air New Zealand and Warehouse).

“Holding too few shares clearly exposes investors to the risk of significant underperformance,” Russell New Zealand consultant John Williams says.

Picking the right industry sectors was as important as share selection in generating strong performance.

“Spreading risk across a broad number of shares and industry sectors is a fundamental requirement in tempering the range of returns an investor receives,” Williams said.

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