Financial Markets Authority moves against Longhorn fund forecasting 50pc return

Plans for The One in Longhorn at Flat Bush. Photo / supplied

The Financial Markets Authority Te Mana Tātai Hokohoko has placed an interim stop order on a scheme which aimed to raise $20 million for a Flat Bush housing project, forecasting a record 50 per cent return.

The action is against The One Management GP and James Law Realty for The One in Longhorn Partnership Fund, which the Herald reported on last week.

That scheme had been open to wholesale investors, including eligible investors and advertised record returns of 50 per cent.

A stop order is a regulatory tool the authority can use to ban or prevent advertising or disclosure that is false or misleading or is likely to confuse consumers or investors, on matters that influence their investment decision.

The authority can issue an interim order, which typically lasts for 15 working days, while it considers if a full stop order is warranted.

It said today it was concerned about statements by The One Management GP regarding the fund's returns payable to investors and the level of risk in the investment.

The interim stop order prohibits The One Management GP from:

• Making any offers, issues, sales, or other acquisitions or disposals of units in the fund;

• Accepting applications for units in the fund;

• Distributing any restricted communication that relates to the offer of units in the fund (i.e. removing any relevant internet advertising/websites, social media posts, sponsored advertising content, and billboards);

• Accepting further contributions, investments, or deposits in respect of units in the fund.

Additionally, James Law Realty, which is also involved in the fund promotion, is banned from distributing any restricted communication that relates to the offer of units in the fund.

The interim stop order was issued under section 465 of the Financial Markets Conduct Act 2013.

James Law told the Herald in response to the action today: "We have to stop distributing materials. It's a good thing, so the FMA can assess it."

Asked how much of the $20m originally sought for the townhouse project had been raised, Law said he could not disclose that. But he would seek advice about whether he could.

"Yeah, it's a surprise. I didn't think I'd get the stop order from the FMA," Law told the Herald.