Innovative Securities loses appeal

High Court rules in favour of FMA, but firm still boasts New Zealand registration on its website.

Thursday, June 8th 2017, 2:48PM

Nick Kynoch, FMA general counsel

Investment firm Innovative Securities has lost its High Court appeal against the Financial Markets Authority’s decision to ask the Companies Office to remove it from the Financial Services Provider Register.

The FMA has been working to remove firms from the register when their registration is likely to create a false or misleading impression that the company provides financial services in New Zealand, is regulated here or when its registration damages the integrity of reputation of New Zealand’s financial markets.

It has directed the Companies Office registrar to deregister 68. Another 21 voluntarily deregistered.

High Court judge Simon Moore said the criticisms of the FMA’s processes could not be sustained and the FMA was correct to determine that the registration of Innovative Securities was or was likely to create a false or misleading appearance that it was an FSP in New Zealand.

The firm’s website still proclaims to have the “classification of ‘financial service provider’ under the law of New Zealand Financial Service Providers (Registration and Dispute Resolution) Act 2008] as evidenced in written records of the Financial Service Providers Register (FSPR)”.

A spokesman for the FMA said it had raised the issue of the website with the company’s legal representatives.

Nick Kynoch, FMA general counsel said, “This decision is consistent with previous judgements on these issues. The decision gives us certainty about how we can use our powers to direct the registrar to de-register companies that have no place on the FSPR. Companies that are obtaining registration unnecessarily and for inappropriate purposes, and their advisers, should be under no doubt about how the law operates and the extent of the FMA’s powers.”

The case is the third appeal against the FMA’s decision to direct deregistration from the FSPR.

The High Court dismissed the appeals brought by Excelsior Markets Limited and granted the appeal of Vivier & Company Limited, but this was overturned in the Court of Appeal. No further appeals are currently scheduled.

The fact of registration on the FSPR does not necessarily mean that a firm is regulated by the FMA.

Tags: FSPR