NZ managers batten down hatches over documents
A turfwar between fund managers in New Zealand has triggered intervention from the Securities Commission.
In New Zealand, fund managers must produce an Investment Statement and a registered prospectus for all their investments.
The Investment Statement is a short form prospectus which generally has bland answers to a set of legally specified questions. The prospectus has much more detail about the funds, including accounts and tax details.
Under law, a manager must give someone either document if they ask. Generally, prospectuses are only ever asked for by advisers and competing fund managers.
The problem is that a number of firms with innovative funds have been refusing to give the documents to their competitors.
The Securities Commission says managers who refuse to give out prospectuses when requested are breaking the law.
Currently, the penalty under the Securities Act is a fine of up to NZ$10,000. However, that figure may rise with legislation currently going through the New Zealand Parliament.
Commission executive chairman Jane Diplock says it has had a number of complaints about prospectuses. Diplock says competitors are members of the public and must be given the information they ask for.
“What we’re doing here is warning companies that they should have those documents absolutely ready if someone puts in a request,” she says.
“This is really a flag to the industry that if they don’t provide these documents, we will take action.”
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