Vanguard receives warning from NZ regulator for disclosure failure
Vanguard has received a formal warning from the Financial Markets Authority (FMA) in New Zealand after the asset manager failed to disclose that action had been taken against it by the Australian Securities and Investments Commission (ASIC).
Vanguard received three infringement notices from ASIC in November for alleged greenwashing in its International Shares Select Exclusion Index fund series.
The three funds were also available in New Zealand through the Trans-Tasman Mutual Recognition regime which allowed an issuer of financial products in Australia to passport into New Zealand without needing to comply with all of the provisions of the FMC Act on the basis that the FMA could rely on the home regulator for supervisory activity.
Under this, Vanguard was required to disclose the enforcement action to the New Zealand regulator “as soon as practicable” and no later than five working days. However, it failed to do so for 55 days and the eventual filing "occured following intervention from the FMA".
It said: “The FMA is satisfied that Vanguard has materially failed to meet its obligations under the FMC Regs by failing to identify its obligations and failing to have adequate processes in place to ensure that it filed the required notice within the prescribed timeframe.
“The FMA has concluded that Vanguard should receive a formal warning concerning this conduct, and that it is in the interest of fair and transparent financial markets that this warning should be published.”
It added Vanguard’s warning should be a reminder to other funds operating in New Zealand to comply with the country’s obligations.
“The FMA considers a warning will reinforce to overseas issuers offering investment products in New Zealand under the MRSO regime that they must ensure they are complying with the New Zealand regime as well as the regime in their local jurisdiction, particularly as they have fewer obligations to comply with than issuers not utilising the MRSO regime to offer products in New Zealand.”
A spokesperson for Vanguard said: "Vanguard Australia regrets our oversight in failing to comply with our notification obligations to the FMA of New Zealand late last year. We have a strong commitment to compliance and transparency at Vanguard as well as meeting the expectations of our regulators and investors. These are principles that we continuously reinforce throughout our organisation.
"We are taking this matter seriously - addressing it through investing in further training, enhanced resourcing alongside expert support for international regulatory matters."
AUTHOR
Laura Dew
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