Tougher rules for advisers to hit Parliament soon
New Securities Act changes putting tougher rules on financial advisers will go before Parliament in the next few weeks.
Wednesday, November 24th 2004, 12:56AM
by Rob Hosking
The Securities Market Reform Bill, which was signed off by Cabinet three weeks ago, will be introduced before Christmas, a spokeswoman for Commerce Minister Margaret Wilson says.
Amongst the bill’s provisions are requirements that investment advisers will have to declare the extent of the professional indemnity insurance, as well as any successful court or disciplinary action against them with respect to investment advice.
That last provision is wider than originally proposed by officials: initially the suggestion was that only criminal convictions be disclosed.
There are also tougher penalties for misleading conduct, which increase tenfold.
“The current limits… $10,000 in the case of an individual; $30,000 otherwise - are not adequate,” according to a Cabinet paper presented by Wilson to Cabinet late last month.
She recommended the fines be lifted to $100,000 for an individual and $300,000 for a body corporate.
“This would underscore the importance attached to providing the public with accurate disclosure and be more closely aligned to the maximum civil pecuniary penalty of up to $1 million available for offences relating to "other obligations" of investment advisers and brokers,” she told ministers.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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