By SIMON HENDERY
The Securities Commission has banned high-profile investment advice firm Money Managers from offering its clients contributory mortgages for the next 12 months.
Money Managers, run by Auckland millionaire Doug Somers-Edgar, is already facing possible prosecution following an investigation by the commission.
Yesterday's ban follows the release of a report
last week in which the commission said that Money Managers and two other companies could face charges over their involvement in a $27 million contributory mortgage tied to Auckland's troubled Parliament St property development.
The commission said Money Managers breached the law when it sold investors into the Parliament St scheme, because the company was not registered as a contributory mortgage broker.
It has referred the matter to the Companies Office enforcement unit, which will consider whether charges should be laid, a process which is expected to take some time.
The Parliament St project, a carpark and apartment development put together by former Olympic kayaker Brent Clode, has been dogged by safety issues, including the death of a worker on the site.
The development had been partly funded by the $27 million contributory mortgage, a financial mechanism which pools together the contributions of small investors.
When the scheme was offered last year, Money Managers' mainly elderly investors were offered 9.5 per cent interest a year for two years.
The money has now been returned and replaced with alternative finance.
Mr Somers-Edgar said yesterday that legal advice to the company at the time the arrangements were put in place had been that Money Managers did not need to be registered as a mortgage broker to market the Parliament St contributory mortgage.
"It was never our intention to breach the regulations and we don't believe we have."
Mr Somers-Edgar claimed the commission's stance would have major implications for the financial advisory industry.
"Anyone who recommends a contributory mortgage to a client is deemed to be acting as a broker under this definition," he said.
Yesterday's move to ban Money Managers from any involvement in similar schemes for the next 12 months follows a clampdown by the Securities Commission on contributory mortgages.
The commission also took action yesterday against another property fund with links to Money Managers.
It banned advertising for the Harbourside Property Fund, a scheme related to the Microsoft House development on the Auckland waterfront.
Commission chairman Jane Diplock said the advertising gave "a confusing impression of the returns from the security".
The Harbourside fund has been seeking $10.5 million from small investors to help finance associated group Dominion Funds' Harbourside Property Fund purchase for $14.5 million of Microsoft House at the Viaduct Harbour.
The offer opened in March and is due to close next month.
The company has moved to have the type size increased in the fine-print areas of its advertisements.
By SIMON HENDERY
The Securities Commission has banned high-profile investment advice firm Money Managers from offering its clients contributory mortgages for the next 12 months.
Money Managers, run by Auckland millionaire Doug Somers-Edgar, is already facing possible prosecution following an investigation by the commission.
Yesterday's ban follows the release of a report
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