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29 May 1998
News Release
WARNING:
PRIME BANK INSTRUMENTS & OTHER ODDITIES - N Z PROFESSIONAL PEOPLE
(See also: Backgrounder)
Anyone asked to act as broker or intermediary for schemes involving "prime bank instruments" or similar instruments should be very careful, according to the Securities Commission.
It appears that people are continuing to promote and invest in these schemes.
"These schemes appear to be fraudulent," Chief Executive John Farrell said, "but it seems that in many cases the New Zealand promoters and investment advisers are unaware of the underlying fraud. They have little experience in the field. They mislead gullible clients."
It has been common practice to involve lawyers or accountants to lend authority to claims that the schemes are legitimate and safe.
"Some of these New Zealand professional people appear to recommend the schemes in good faith," John Farrell said. "They are naive."
Invariably the offer documents for these schemes do not comply with the Securities Act. They are promoted to the public without either a registered prospectus or an investment statement. No trustee or statutory supervisor is appointed.
Important information is withheld from investors, and they are unable to evaluate claims in a sensible way.
The level of involvement of some New Zealand professional people is such that they may be promoters of the offer to investors. A person promoting securities to the public in a manner which does not comply with the law may be personally liable for repayment of money to investors and may face criminal charges.
HOW TO RECOGNISE A CROOKED INVESTMENT SCHEME
You should beware of schemes which:
- have no Investment Statement or Registered Prospectus;
- give few or no details about the issuer and do not have financial statements;
- promise unusually high returns.
You should beware of offers which claim that:
- the investment is "safe" or "risk-free";
- funds remain in a trust or "escrow" account until a verified bank guarantee is received against them;
- returns come from "top 100 world banks", "prime banks", "top 25 European banks" or similar statements;
- this is a "private" offer, and only open to a select few;
- the scheme must be kept confidential in order to succeed.
John Farrell
Chief Executive
Contact phone 472 9830
Contact:
Catherine Chapman, Communications Officer, 04 472 9833 ext 840