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Law Reform: Investment Advisers
A Discussion Paper

CHAPTER 1 INTRODUCTION

1.1	The Securities Commission ("the Commission") is an independent statutory body. Its functions include to review the law relating to securities and to recommend changes it considers desirable. This discussion paper has been prepared in accordance with that function.
1.2	We consider the regulation of investment advisers to be of such significance as to merit this review. The Commission is seeking comments on a number of proposals to amend the Investment Advisers (Disclosure) Act 1996. In brief these proposals are to: Replace the current two-tier disclosure regime with a one-tier mandatory initial disclosure regime. Improve the content of investment adviser disclosure statements. Make it an offence to recommend, encourage or knowingly assist a client to acquire securities, knowing that the offer of those securities does not comply with the Securities Act 1978. Strengthen enforcement processes in regard to investment advisers.
1.3	We consider these to be areas where the law could be improved. This paper invites comment on the utility of such amendments.
1.4	The New Zealand investment adviser regulatory regime has a different policy emphasis from that in many other jurisdictions. The principal difference is that we do not license investment advisers. Rather we have rules for disclosure of matters relevant to investment advisers. We do not review this policy difference in this present paper. We consider that it is better left for others, in particular the Government, to consider whether that is an issue or whether there should be a change. We nevertheless consider that these disclosure rules can be improved within the general policy of the existing law. We should note that as the changes we are suggesting generally fit within the existing policy we have not undertaken an economic analysis of this policy. Our aim is to ensure that the existing law works effectively and efficiently.
1.5	The purpose of this paper is to promote public discussion about investment adviser disclosure and related matters. The Commission welcomes submissions and comments from interested parties. We shall carefully consider these before making any recommendations to Government.

Invitation to Comment

1.6	Any reform of the law gives rise to a number of important and at times complex questions. A number of discussion questions arise in the course of this present review. They are set out in appendix "A" at the end of the paper. We are interested in your views on these questions and any others you consider relevant to this review not already raised.
1.7	Any comments or submissions received are subject to the Official Information Act 1982. It is the practice of the Commission to make submissions available on request and where appropriate to draw attention to them in any further paper. If you would like us to withhold information included in comments on this paper would you please let us know. Any request to withhold information will be considered in accordance with the Official Information Act 1982.
1.8	This paper may be downloaded from the Commission's website (www.seccom.govt.nz). Comments on this discussion paper should be sent to the Commission by 22 October 2001. They can be emailed to toby.norgate@seccom.govt.nz or sent in hard copy to: Toby Norgate Lawyer Securities Commission Facsimile: (04) 472 8076 PO Box 1179 WELLINGTON