Private Financial Services
The FMA issued a warning regarding General Equity on the 29th September 2014 and directed that the warning be published on General Equity’s web site.
The directors and senior managers at General Equity were surprised that after extensive correspondence in relation to the FMA’s concerns, which were overwhelmingly relating to past events and the activities of other entities or persons, the FMA proceeded to issue the warning and to order its publication. The powers of the FMA are new and largely untested. General Equity is reviewing its legal optionsand has engaged legal advisers who are in communication with the FMA. The only avenue for response is by way of legal review which is costly and lengthy.
One of the concerns raised by the legal advisors is that one of the views which the warning says that the FMA holds is not, according to the extensive correspondence, a view which the FMA in fact holds. The view which the FMA does not hold (according to the correspondence) is the view that General Equity has made statements that are misleading and deceptive. The FMA has not been able to show a single person who has been either been deceived or who made a legitimate complaint.
The FMA also gave an opinion that the assets of the ABF Fund 1 were not as stated. General Equity was the trustee of The ABF Fund 1 and has never claimed to hold the assets of the Fund beneficially or in its own right. The ABF Fund 1 underwrote some of the instruments issued by General Equity. The FMA has not found any fault with any of General Equity’s instruments. During the time it was trustee of the Fund, General Equity required the Fund’s accounts to be audited. The auditors were a well-respected Malaysian firm experienced in auditing Financial Institutions, Banks and Government bodies. These audits were relied upon by General Equity and the mangers of ABF Fund 1. The sources of the assets have been rated by the internationally respected rating company, Dunn & Bradstreet.
The FMA, however, has not undertaken any audit of either the assets nor the accounts of the Fund. General Equity, the present trustee, and the managers of the ABF Fund 1 all strongly disagree with the view expressed by the FMA in its warning. None of this is mentioned by the FMA in giving their view.
General Equity has for some time has been in negotiation with a successful Malaysian registered fund called IBB. On the 8th of October 2014 contracts were signed to finalise a buyout of the major shareholders of General Equity, subject to shareholder consent.
After the shareholder buyout there will be a new board of directors appointed and new managers will take over the operations of General Equity. Also there will new and substantial assets injected into General Equity from IBB which will back the continuing operations of General Equity.
Under IBB management General Equity will continue its trade finance operations and continue to establish arrangements and deal with other institutions, corporate clients and larger sophisticated investors.
FMA Warning: Exercise extreme caution when dealing with General Equity see below
The Financial Markets Authority (FMA) has issued a warning to the public about General Equity (previously named General Equity Building Society), a New Zealand building society. FMA warns any persons dealing with General Equity to exercise extreme caution before obtaining any financial services, or acquiring any financial products, from General Equity. In particular, FMA warns those persons to take into account that:
FMA regulates New Zealand's financial markets. Our main objective is to promote fair, efficient and transparent financial markets. To find out more about us and for help with investing see www.fma.govt.nz.Click here to view our registration