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28 February 2006
News release
Securities Commission accepts enforceable undertaking from Contributory Mortgage Investments Limited
The Securities Commission has accepted an enforceable undertaking from contributory mortgage broker Contributory Mortgage Investments Limited (CMI), its director John Martin and its consultant Peter van Nieuwkoop.
This follows the Commission's inquiry into CMI's offering and management of interests in three mortgages, the Greys Avenue Development Limited first and second mortgages and the Trans Tasman Hotel Corporation Limited mortgage.
The Commission is satisfied that CMI contravened a number of provisions of the contributory mortgage regulations in its offering and management of these mortgages.
"The Commission considers that CMI failed to meet the standards of care and good governance that it expects from people who raise funds from the public", Commission Chairman Jane Diplock said.
"Investors may have been misled about the financial state of the borrower, the value of guarantees given and the use of investors' funds to repay contributions made by trusts associated with Mr Martin and Mr van Nieuwkoop".
CMI, Mr Martin and Mr van Nieuwkoop have acknowledged the Commission's concerns and have offered undertakings to the Commission.
"By implementing these undertakings CMI has an opportunity to raise its standards of care and governance to the standards required of those who raise funds from the public", Jane Diplock said.
CMI, Mr Martin and Mr van Nieuwkoop have undertaken to:
- obtain independent legal advice about their securities law obligations;
- upgrade their accounting systems;
- appoint an independent director;
- engage their auditors to perform an enhanced audit role and report to the Commission;
- ensure that contributors are given all information that may be material to their decision to invest; and
- refrain from offering new contributory mortgages to the public before 31 March 2006.
The enforceable undertaking is on the Commission's website, www.seccom.govt.nz.
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Contact: Catherine Chapman phone 04 471 7659 mobile 027 2969 130
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