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27 March 2002

News Release

Securities Commission Removes The Mortgage Financier Limited as Contributory Mortgage Broker

The Mortgage Financier Limited has been ordered to cease to act as contributory mortgage broker for a contributory mortgage in respect of 1 Parliament Street Car-Park Limited.

Crichton Horne & Associates Mortgage Brokers Limited have been appointed to act in place of The Mortgage Financier Limited.

All advertisements for the Parliament Street contributory mortgage have been banned.

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 The Mortgage Financier Limited 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's decision is in the public interest because:

• the broker failed to take adequate steps to comply with the Regulations after becoming aware of breaches which indicates that contributors' funds are not properly managed and may be at risk; and
• the directors of the broker have 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, Chartered Accountants, Christchurch.

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