The Financial Markets Authority (FMA) has filed criminal charges against a former financial adviser, whose identity is currently protected under interim name suppression.
The adviser faces two representative charges of theft by a person in a special relationship, to which they have entered a plea of not guilty.
The FMA alleged that the individual misappropriated around $1.7 million from two separate client groups, promising to invest the funds on their behalf. Instead, it is claimed that the money was used for personal expenditures. The alleged activities occurred over a period spanning from 2016 to 2022.
The charges were lodged in the Auckland District Court, where the defendant could face up to seven years in prison if found guilty. The next court date is set for Oct. 17, 2024.
In a separate case pushed by the FMA, the High Court recently imposed a $1.4 million fine on Peter Harris, the former managing director of CBL Corporation Limited (CBLC), which is currently in liquidation.
The penalty comes after the FMA pursued legal action against Harris for breaches of continuous disclosure and misleading conduct under the Financial Markets Conduct Act 2013.
The case, initiated by the FMA in 2019, centred on claims that CBLC failed to meet its continuous disclosure responsibilities between 2017 and 2018.
The FMA pointed to several issues, including the need for CBL Insurance Limited to boost its reserves, the presence of unpaid insurance premiums from a French subsidiary, and directives issued by the Central Bank of Ireland to CBL Insurance Europe dac, a subsidiary of the company. The regulator also accused CBLC of misleading investors with an August 2017 market announcement.
In March 2024, Harris reached a settlement with the FMA, admitting to seven breaches of the Financial Markets Conduct Act. The fine was agreed upon by both parties and subsequently approved by the court.
In his ruling, Justice Gault noted that Harris’s actions had significantly impacted the integrity of New Zealand’s financial markets by depriving investors of essential information.
FMA enforcement head Margot Gatland commented that the fine underscores the seriousness of Harris’s conduct, especially given his executive position at CBLC.
Harris has also agreed not to take on any management or directorship roles in listed companies or licensed insurers in New Zealand until a separate ongoing legal matter concludes.
This case, which involves allegations connected to CBLC’s 2015 initial public offering, is slated for a hearing in April 2026.
