Commission removes another contributory mortgage broker The Commission ordered The Mortgage Financier Limited to cease to act as contributory mortgage broker for a contributory mortgage in respect of 1 Parliament Street Car-Park Limited, on 27 March 2002. Staff appointments Sanjiv Jetly has been appointed the Commission's General Manager. Sanjiv is a chartered accountant and has an MBA. He was formerly General Manager Operations of Tower Managed Funds and has also worked for WestpacTrust. Liam Mason has been appointed General Counsel. Liam was formerly a Senior Lawyer with the Commission. Caroline Cole recently joined the staff as Library Manager. Caroline came to us from the Department of Corrections. She has worked in several government and academic libraries as well as the private sector. ALSO IN THIS ISSUE:   Chairman speaks at OECD Round Table   Review of NZSE Rules   Policy - substantial security holders   New look for our website Crichton Horne & Associates Mortgage Brokers Limited of Christchurch were appointed to act in place of The Mortgage Financier Limited. The Commission banned all advertisements for the Parliament Street contributory mortgage. The contributory mortgage raised funds to lend to the developer of a multi-storey apartment and car park building in central Auckland. More than 1,000 people invested in the mortgage. The Commission acted because it was satisfied that The Mortgage Financier Limited had breached provisions of securities law. In particular:   the valuation for the contributory mortgage was likely to deceive, mislead or confuse investors and did not comply with the Contributory Mortgage Regulations;   contributions were paid to the developer: -  before the full amount of the mortgage had been raised; -  when insufficient funds had been raised to complete the project; and -  when the broker knew or ought to have known the valuation report was false or misleading. The Commission acted in the public interest because it considered:   the broker failed to take adequate steps to comply with the Regulations after becoming aware of breaches which indicated that contributors' funds were not properly managed and may be at risk; and   the directors of the broker failed to meet the standards of care and good governance expected of those who seek to raise funds from the public. Investor inquiries should be made to Crichton Horne & Associates, Chartered Accountants, Christchurch. In December 2001 the Commission ordered New Zealand Commercial Mortgage Brokers Limited to cease to act as contributory mortgage brokers. New Zealanders have large sums of money invested in contributory mortgage schemes which tend to be promoted as high return investments. It is important that people understand the risks associated with such investments. Commission Chairman Jane Diplock says investors also need to be confident that contributory mortgage schemes comply with the law and are properly managed. Investors grateful for information When the Commission ordered New Zealand Commercial Mortgage Brokers Limited to cease to act as contributory mortgage brokers last December, it appointed accountants Crichton Horne & Associates to manage the contributory mortgages. As part of the business of managing the mortgages Crichton Horne send investors regular circulars keeping them informed of what is happening with their investment. (continued on page 2)

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THE BULLETIN April 2002

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