A stockbroking company and its New Zealand-based director face significant fines after being found guilty of claiming to be registered on the Financial Service Providers Register.

Pegasus Markets Ltd and Michael Reps were charged by the Financial Markets Authority (FMA) in February 2018 with breaching the Financial Service Providers (Registration and Dispute Resolution) Act (FSP Act).

It was one of only a handful such prosecutions in the country.

Both defended the allegations but, after a judge-alone trial earlier this year in the North Shore District Court, the trading company and Reps were found guilty on all charges.

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The FMA said it prosecuted Pegasus Markets and Reps after the company stated on two websites it was registered on the Financial Service Providers Register (FSPR), despite it being deregistered.

Pegasus Markets, which was incorporated in March 2014, was also warned by the New Zealand Companies Office about the misleading statements but failed to remove them.

Judge June Jelas found Pegasus Markets guilty of two charges of breaching section 12 of the FSP Act. The law states no one can purport to hold out as registered on the FSPR unless they are and also a member of an approved dispute resolution scheme.

Reps, whose residential address is listed in Point Wells near Matakana, was also found guilty of knowingly failing to prevent Pegasus Markets from committing an offence under the legislation.

In 2017, the FMA said it would crack down on New Zealand directors who encouraged the misuse of the FSPR, which was established in 2008 and from 2010 required any company or individual providing financial services in New Zealand to be on it.

In a statement today, the government agency said registration on the FSPR did not necessarily mean an entity was regulated by the FMA.

It said individuals and businesses had sought to use registration as a way to establish legitimacy and then target overseas investors, exploiting New Zealand's reputation.

After the guilty verdicts, Pegasus Markets now faces a maximum fine of $300,000 for each charge, while Reps faces 12 months' imprisonment and/or a $100,000 fine.

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The company and Reps are due to be sentenced in November.

Reps had also fought for continued name suppression in the case, arguing publication of his identity would negatively effect his business and income.

However, an appeal to the High Court was dismissed by Justice Paul Davison in August 2018.

Reps was appointed a director of Pegasus Markets in October 2015. He has previously been the director of some 100 New Zealand companies, more than 20 of which have been deregistered from the register or have made unsuccessful applications to be registered.

Pegasus Markets' only other director and sole shareholder is Rafael Ruiz Lemonche, whose residential address is in Barcelona, according to Companies Office records.

The company's registered office is on Dickens St in Napier and listed as the address for Business Results (HB) Ltd, a Hawke's Bay accounting firm.

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Other similar prosecutions the FMA has pursued against businesses or individuals purporting to be registered on the FSPR include Morgan DeVere Corporate Finance Ltd, which was fined $40,000 by the Wellington District Court in June last year.

Morgan DeVere's NZ-based director, former Wellington real estate agent Rene Moorby, also pleaded guilty and was sentenced to 75 hours of community service for his part in the offending.

In a separate case, South Island businessman Garry James Patterson was prosecuted and sentenced to 200 hours' community work and three months' community detention in 2018.

The FMA has also used its powers under the FSPR Act to have companies deregistered from the FSPR.

The government agency would not comment further about Pegasus Markets and Reps until after sentencing.

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