The New Zealand Financial Markets Authority published a High Court ruling that clarifies how the eligible investor exclusion under the Financial Markets Conduct Act should be applied in wholesale investment offers, following the FMA’s request for guidance on the use, confirmation and acceptance of eligible investor certificates. The Court found that an eligible investor certificate must state the grounds for certification, but does not need to set out detailed investment experience to be valid, provided the stated grounds are capable of supporting the certification. Offerors must be satisfied a certificate is valid, but where it has been confirmed by a financial adviser, lawyer or accountant, the offeror may rely on that confirmation and is not required to assess the investor’s actual ability to evaluate the investment or the adequacy of the grounds stated. If an offeror cannot rely on the certificate, the offer must be made with retail disclosure unless the investor otherwise qualifies as a wholesale investor. The FMA indicated it will continue work with MBIE on the wholesale investment regime’s policy settings and will continue taking action where conduct misleads people into wholesale investments when retail protections should apply.

Original source View in tracker