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Home / Northern Advocate / Business

SPI directors fined over financial reporting breach

By Christine Allen
Northern Advocate·
6 May, 2015 02:00 AM3 mins to read

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Two directors with links to the Quest block have been fined for failing to file audited financial statements. Photo / Michael Cunningham

Two directors with links to the Quest block have been fined for failing to file audited financial statements. Photo / Michael Cunningham

Two directors involved in Whangarei's $9.5 million Quest apartment block have been fined $25,312 each for breaching the Financial Reporting Act.

SPI Property Fund Limited directors Murray Alcock and Allister Knight were fined at Auckland District Court through the Financial Markets Authority (FMA) for failing to file audited financial statements for their property investment company.

The pair, who also head up the Canvas Investments involved in the Quest development in Whangarei, pleaded guilty to three charges of failing to file audited financial statements for SPI Property Fund Limited to the Registrar of Companies for the years ending 2011, 2012 and 2013.

FMA director of enforcement and investigations Belinda Moffat said the FMA expected companies that offered securities to "file their financial statements in a timely way to enable investors to make informed decisions".

"The court's decision sends a further strong signal to companies raising funds from the public that the FMA will take enforcement action when companies persistently fail to meet their obligations," she said.

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She stressed that access to public financial information helped investors make decisions about the allocation of assets across their entire investment portfolio.

Judge Stan Thorburn said the purpose of the obligation to file reports was "obviously to ensure transparency and preserve integrity in the management of investors' money.

"Directors of companies acquiring funds from the public must assume a high level of accountability for that and always be able to demonstrate that the funds are being used and applied in a meticulous way conforming to the prospectus that the investors have responded to," he said.

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Late last year the FMA banned the pair from fronting investment companies. They were ordered to repay $1.08 million to investors in their SPI Property Fund and return proceeds from the sales of a commercial building in Auckland and the Waitakere Court House.

The pair had breached financial markets legislation by failing to register financial statements and hold investors' subscriptions on trust. They had failed to repay subscriptions owed to SPI Property Fund shareholders and keep them informed about investment performance.

In 2014, the pair signed an enforceable undertaking to the FMA that they won't seek or hold public investment funds.

In a statement to the Advocate at the time, Alcock said the apartment block on the corners of Bank and Cameron Sts would not be affected by that disciplinary action as Canvas Investment was a property services company which did not raise money from the public and was not part of the ownership or funding structure.

The ban only prevented Alcock and Knight from acting as directors, promoters, chief executives or chief financial officers (or equivalent position) for any company which sought or held investment funds from the public.

The partners have been involved in a string of liquidated companies and had until June to resign from their various investment company directorships.

Quest Serviced Apartments NZ, the tenants of the building, said at the time that Quest was not worried about the involvement of Canvas Investments.

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