FMA got fewer complaints in 2014, had 30 open cases

The Financial Markets Authority received fewer complaints in its 2014 financial year after the David Ross Ponzi investigation sparked a flood on inquiries in 2013, and had just 30 open cases at the end of the period.

The financial markets watchdog received 839 complaints in the 12 months ended June 30, down from 1,273 a year earlier when investors in the Ross Asset Management scheme became aware of its impending collapse, according to the FMA’s annual investigations and enforcement report. Of those complaints 68 were referred to the enforcement team, who were engaged in 76 inquiries and 29 litigation matters in the year. Out of those probes, 46 were closed in the year, leaving 30 open cases on the enforcement team’s desk as at June 30, down from 50 a year earlier, and 13 cases before the courts.

The regulator said secondary market issues “were a significant area of focus” accounting for about 21 percent of inquiries and investigations, including potential insider trading, market manipulation and disclosure breaches. That was up from 18 percent in 2013. Of the 12 insider trading probes, five were still at a preliminary stage, two proceeded to the investigations stage with one closed due to a lack of evidence and the other still open.

Three market manipulation investigations were referred to the enforcement team, one of which went to investigation stage and one was continuing. There were 22 continuous over substantial shareholder notices and directors and officer notices, with one still open at June 30. Six other continuous disclosure probes were carried out, of which one was still ongoing.

“We anticipate continued focus on a range of secondary market conduct issues, typically in conjunction with NZX,” the report said. “Identifying and reacting to possible instances of insider trading and market manipulation is central to our mandate.”

The 2014 financial year encompassed the introduction of the Financial Markets Conduct Act, which overhauled the country’s decades-old securities law with a goal of improving public confidence in New Zealand’s capital markets.

The FMA report said the regulator’s first focus is to help market participants understand their obligations under the new law, and will encourage the market to press for high standards of corporate governance.

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