An Auckland stockbroker has pleaded guilty to fraud and using investor funds to repay other clients rather than for options trading.
Gregory Alan Arnott pleaded guilty to 10 Crimes Act charges in the Auckland District Court, the Serious Fraud Office said in an announcement yesterday.
The SFO in 2012 laid five charges of theft by a person in a special relationship and another five charges of false statement by a promoter against Arnott.
Arnott, 51, was an options-trader and through his companies - such as Derivatek New Zealand - traded on behalf of local clients on the Australian Stock Exchange.
The stockbroker admitted between April 2008 and May 2012 he used investors' money for purposes other than options trading.
This included repaying other investors and funding a portion of an advance fee in an attempt to obtain a US$20million loan, the SFO said.
Arnott issued false statements to conceal the fraud, the SFO said.
"Mr Arnott earned the trust of a group of investors through his personal association with them. He misappropriated his clients' funds and misrepresented the true position of their investments. The SFO hopes that this outcome will go some way to assuring investors that there is an effective response to offending of this nature," SFO director Julie Read said yesterday.
The loan which Arnott and Derivatek attempted to get was from United States based funds provider, Brockstar Group.
Another New Zealand company - run by now-jailed fraudster Jacqui Bradley - also attempted to get a loan from Brockstar.
In both cases substantial sums had been paid as advanced fees in an attempt to secure loans, the SFO has previously said.
In 2012, the SFO said a formal investigation has been commenced into the New Zealand activities of Brockstar.
The SFO confirmed this morning that its investigation into Brockstar has been closed.
An associate of Arnott, Mark James Whelan, is accused by the SFO of assisting getting investors to put funds with Arnott and Derivatek through his company Global Futures Trading Limited.
Whelan is facing three charges laid under the Crimes Act of theft by person in a special relationship, and seven of false statement by promoter.
His trial on these charges is due to begin on Monday.