By ELLEN READ
Eleven overseas fund managers are having to contact thousands of New Zealand investors to admit breaching local securities law.
The investors - who number in the tens of thousands and collectively have hundreds of millions of dollars in the funds - might be in line for compensation if
they can prove the funds' breaches disadvantaged them.
That's the flipside to the Government's announcement last week that the funds themselves can apply to the court for relief from the blanket penalties imposed on them for the breaches of the Securities Act.
Legal exemptions to the act allow funds from Australia and Britain to be offered in this country without producing a separate New Zealand prospectus. The fund managers have to meet certain legal requirements, including filing documents with the Registrar of Companies.
BT Funds admitted in April that it had failed to file some documents on time and since then others have been identified.
Securities Commission general counsel Liam Mason declined to name the funds who have admitted breaching the law but said they had been ordered to alert investors.
Commerce Minister Lianne Dalziel plans to amend the act to help the fund managers facing millions of dollars in losses because of minor technical breaches of securities law.
The amendment also allows investors to seek compensation from the court.
"Under present law, a number of overseas collective investment schemes risk losing millions of dollars for what can be described as technical breaches," Dalziel said.
A perception that these led to severe penalties, with no avenue for relief, could scare overseas investment schemes away from making offers in the local market, she said.
While deciding not to retrospectively validate any breaches by overseas issuers, Dalziel said the changes allowed the issuers and investors to seek relief in court.
"This measure provides an appropriate balance between the interests of investors and issuers. It will allow the court to consider prejudice to investors as well as the materiality of the breach," she said.
BT Funds welcomed the Government's move.
"It offers clarity to issuers and investors," said Paul Gregory, media spokesman for BT's owner, Westpac.
BT has applied to the High Court for relief.
A timetable for the case will be decided on November 10 and Gregory hopes it will heard under the new law.
By ELLEN READ
Eleven overseas fund managers are having to contact thousands of New Zealand investors to admit breaching local securities law.
The investors - who number in the tens of thousands and collectively have hundreds of millions of dollars in the funds - might be in line for compensation if
AdvertisementAdvertise with NZME.