FMA bans Geneva Finance from borrowing from public

Sean Hughes, head of the Financial Markets Authority. Photo / Mark Mitchell
Sean Hughes, head of the Financial Markets Authority. Photo / Mark Mitchell

The new Financial Markets Authority (FMA) has announced it has used its new powers for the first time to stop Geneva Finance from borrowing from the public after it breached a loan agreement with Bank of Scotland.

The breach of the loan agreeable in the March quarter meant Bank of Scotland could demand repayment from Geneva immediately, the FMA said.

See the announcement here.

"We believe our action is in the public interest because the prospectus relates to a continuous offer of debt securities. It is vital that existing and prospective investors have sufficient information about the company to make an informed assessment of their investments," said FMA Chief Executive Sean Hughes.

"The interim order will prohibit any further allotment and so protect investors from being misled," Hughes said.

"Our first use of this new stop order power is one means by which we can improve investor confidence in the accuracy of information presented to the market."

The FMA said it was seeking further information from Geneva Finance while it considered whether it used its power to order the offer documents be corrected or cancelled on the grounds they were likely to deceive, mislead or confuse investors.

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