Cold callers from overseas still plague Kiwis New Zealanders continue to be telephoned by people from overseas with offers of shares and associated deals. Many are "follow-up scammers" who ring a person who has already lost money to a previous telephone caller. The "follow-up scammer" offers to buy the person's worthless shares but, of course, the person must send more money first. Inevitably the follow-up is a continuation of the original scam. Recently "follow-up scammers" have become more subtle in their approach as their targets, hopefully, have become more cautious in dealing with cold callers from overseas. Callers now claim to be engaged in quite plausible schemes. Some say they are legal advocates and will help the New Zealander seek redress for past losses. Others claim to be tax accountants, offering a United States citizen's blue chip shares in exchange for the New Zealander's nonperforming, unquoted shares so that the American can claim a tax loss. Some even claim to be issuers themselves offering to exchange existing shares for their own shares. Of course, all these situations inevitably involve the payment of further funds. A request for any "advance fee" should ring alarm bells for anyone who is telephoned from overseas. Legitimate sales of securities do not require up front "escrow payments" or "insurance bonds" or other technical-sounding payments. The likelihood of the new approach being a new fraud grafted on to the old fraud is extremely high. Anyone wishing to sell shares purchased from an overseas broker should contact a New Zealand broker for advice. What's in a name? Some entities that have recently called New Zealanders are: Bentley Moore & Daines Sterling Strategies Group Limited Capital Growth Equities S.L. DKM Global Management Inc Fairchild Roth Financial Inc (not to be confused with the international investment bank NM Rothschild) First National Financial Group Inc Kempton Fitzgerald Limited (not to be confused with capital market firm Cantor Fitzgerald) Oasis Capital Inc. (not to be confused with venture capital firm Oasis Capital Partners) Pan Euro Financial SA Richard Watson Associates These entities and their addresses are published, with some 80 others who also do not appear to comply with New Zealand law, on www.seccom.govt.nz. The names above are typical of the names which these fraudsters choose for themselves as they seek to conjure up images of established and reputable firms. Some choose names composed of generic terms such as "international", "global", "capital", "strategic", "finance" or "investment". Others use elements of names of reputable organisations to exploit a possible seed of familiarity in the target person's memory. Many entities appear to have a prestigious address e.g. Broadway, Wall Street, Piccadilly, or Canary Wharf. These addresses, however, may only be a bureau offering phone/fax facilities or may be a deliberate lie printed on impressive-looking letterhead. Slick, professional-looking websites are another trap for the unwary. They seldom give any details of the supposed investment or of the people who are behind it. False names, phoney addresses, and apparently impressive websites are tools that scam artists use to pull the wool over their victims' eyes. What to do Anyone receiving unsolicited calls should get as much information as possible from the caller. Ask them for the offer documents (investment statement and prospectus). In particular, establish the name and address of the entity and if possible the caller, and details of the "investment" they are offering. This information can then be passed to the police or sent to the Securities Commission. We are also interested in information about websites which offer investments but give little detail about the investment or the people making the offer. MOUs to be signed The Securities Commission proposes to sign three Memorandums of Understanding with counterpart regulators during the Asia-Pacific Regional Committee meeting in February. The MOUs provide for information sharing between regulators relating to enforcement of securities law. The MOUs to be signed are with the China Securities Regulatory Commission, the Securities Commission of Malaysia, and the Indonesian Capital Market Supervisory Agency. If you would like to receive the Bulletin by email contact catherine.chapman@seccom.govt.nz How to Contact Us Securities Commission Level 8, Unisys House 56 The Terrace, Wellington PO Box 1179, Wellington Telephone +64-4-472 9830 Facsimile +64-4-472 8076 Email seccom@seccom.govt.nz Website www.seccom.govt.nz   We are moving! From 2 February 2004 our address is Level 8, Unisys House, 56 The Terrace, Wellington. Our post office box, phone and fax numbers, and email addresses are unchanged. The views expressed in The Bulletin do not necessarily represent the formal views of the Securities Commission, whether on securities or other matters.

4

THE BULLETIN January 2004

[Page 1] || [Page 2] || [Page 3] || [Page 4]