The Financial Markets Authority (FMA) has issued a Stop Order against Syndicated Trusts Limited (STL), ordering the company to stop advertising or accepting money for financial products.
The FMA warns New Zealanders to be wary of dealing with the company.
A Stop Order is a statutory power the FMA can use to stop particular behaviour or force a market participant to take steps to prevent further harm. It can be applied without the need to go to court.
On several occasions the FMA has sought clarification from STL’s directors at the time, John Lehmann (now a former director) and Xinghua Fan, about various newspaper advertisements relating to an offer, or planned offer, of financial products.
The Stop Order prohibits STL from certain activity, including:
- distributing communications and advertisements about itself or the offer of financial products,
- accepting applications or money for financial products.
The Stop Order was issued because STL contravened several aspects of the Financial Markets Conduct Act. The advertisements either failed to make it clear that STL was only seeking preliminary interest for the offer or STL failed to prepare and lodge a product disclosure statement with the Registrar before making the advertisements.
The FMA also considered that STL’s advertisements were likely to confuse or mislead people and may have been making unsubstantiated statements, including that that STL was a co-operative when it is not and that investors would receive a return of “6.5% to 10.5% + dividend”.
Nick Kynoch, FMA’s General Counsel said, “Stop Orders are used by the FMA when a business consistently fails to comply with the law, or respond to our concerns. It is an offence to fail to comply with a Stop Order and we are warning the public to exercise extreme caution when dealing with STL.”