Adviser X judgement reserved

The Financial Advisers Disciplinary Committee reserved judgement in a case heard today in Auckland against a former senior financial adviser.

Thursday, May 29th 2014, 11:31AM

Pending the release of their decision, to be released on the Financial Markets Authority website, the adjudicators upheld a request by the defendant for name suppression to shield the adviser's identity from "the world and his wife".

The allegations against the adviser relate to three sections of the Financial Advisers Act involving record-keeping.

During the proceedings, specifics allegations of the breaches, which were admitted to by the adviser, were not made public but in general terms "contributed to ensuring the client was incapable of making an informed decision".

The Financial Markets Authority, which took the case to the tribunal, is seeking a financial penalty.

The defendant's lawyer argued that his client had suffered sufficiently by being forced out of work for close to nine months.

He said he had been cost "not less than $200,000" in losses stemming from the product he was selling at the time.

It was argued that a "supervisory order" would be sufficient penalty under the circumstances. That would involve the FMA enforcement team monitoring the adviser's works.

"He's a humbled and reformed man," said his legal counsel, adding that despite name suppression the case had sent ripples through the tight-knit financial services sector. "Everyone in the market has heard the message loud and clear."

On the matter of name suppression, the tribunal judges said the nature of the offence wasn't such that the public needed to be warned that he was a "bad man that was going to rip them off".

Rather what was necessary under the circumstances was that future clients be told, via disclosure statements and communications, simply that his "record-keeping wasn't up to scratch".

Since the committee was established in 2010, it has made four decisions but all have concluded without a full-blown hearings.

The advisers in these cases include David Ross, Stephen Musaphia, Graham Beecroft and Ian Bourke-Shaw.

Authorised Financial Advisers who appear before the committee are referred to it by the Financial Markets Authority, The disciplinary proceedings come from complaints about AFAs who have allegedly breached of the Code of Professional Conducte Code.

The FADC has the ability to make determinations and impose penalties ranging from recommending to the FMA that it cancel an AFA’s authorisation, through to imposing a fine not exceeding $10,000.

The panel hearing the case is made up of chairman and former High Court judge Sir Bruce Robertson, financial planner Simon Hassan and investment banker Peter Houghton. The majority of Houghton’s career has focused on providing investment research to fund managers’ globally. His last role was Global Head of Investment Research at Dresdner Kleinwort Investment Banking in the United Kingdom

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