The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has cancelled the managed investment scheme manager licence of Fund Managers Otago (FMO).
This is the first time the FMA has proactively cancelled a MIS manager licence.
James Greig, FMA Director of Supervision, said the FMA considered FMO’s material contraventions and determined it was no longer capable of being a fund manager.
“Cancelling a licence is one of the strongest regulatory actions we can take and it’s not a decision we take lightly,” he said. “It effectively stops a business from operating in the retail investment sector.”
The FMA found FMO’s inadequate compliance and governance arrangements had resulted in continued material breaches of its licence obligations. These included:
- Disclosure: Incorrectly calculating and disclosing returns in fund updates
- Related party benefits: entering into prohibited related party transactions
- Compliance with SIPO (Statement of Investment Policy and Objectives): failing to manage certain funds within their SIPO limits for persistent periods of time
- Record keeping: not maintaining appropriate records of key decisions and activities in relation to receiverships
- Financial resources: not calculating net tangible assets in accordance with the standard licence conditions
Mr Greig said cancelling FMO’s licence was the appropriate and proportionate response to material contraventions of its licence obligations.
The cancellation is effective 5pm, 7 July 2021 and was made under section 414(3) of the Financial Markets Conduct Act 2013.