FMA obtains enforceable undertakings from NZ residents found liable for financial misconduct in Australia

 

Media release
MR No. 2015 – 30
13 July 2015

The Financial Markets Authority (FMA) has today agreed to accept enforceable undertakings from David John Hobbs and Jacqueline Hobbs, limiting their activities in New Zealand’s financial markets.

Mr and Mrs Hobbs are New Zealand residents and company directors. They have been found liable for serious financial misconduct by the New South Wales Supreme Court for the operation of 14 unregistered, offshore-managed investment funds administered in Australia. The penalties imposed by the court included banning orders against Mr and Mrs Hobbs.

The undertakings given to the FMA require that:

  • Mr Hobbs will not act as a director or promoter of a company in New Zealand permanently and will not provide financial adviser or broking services in New Zealand; and
  • Mrs Hobbs will not act as a director or promoter of a company in New Zealand for 4 years and will not provide financial adviser or broking services in New Zealand.

This is subject to an exception that allows Mr and Mrs Hobbs to continue to operate their Nelson-based car dealership on the specific condition that their business will not:

  • seek to raise funds from or offer any securities or financial products to members of the public; or
  • be involved in providing financial services (including borrowing or lending money) to customers purchasing or selling vehicles through their business.

Belinda Moffat, the FMA’s director of enforcement, said “the FMA acknowledges the Australian court’s findings that Mr and Mrs Hobbs have engaged in serious financial misconduct, involving false misrepresentations to the investing public, including New Zealand investors. 

“These undertakings harmonise the position in New Zealand with the bans imposed in Australia and ensure that the New Zealand public receives the same protection as the Australian public.”

Where a New Zealand resident is found liable for misconduct in another jurisdiction, the FMA may apply to the court for a management banning order under the Financial Markets Conduct Act. This ensures that the New Zealand public receives the same level of protection as given in another jurisdiction. Undertakings deliver protection without the time and cost of a court proceeding. 

The full undertakings are available here.

Contact:
Andrew Park
09 967 1215
021 220 6770
andrew.park@fma.govt.nz

Background
In 2010, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against various defendants including Mr and Mrs Hobbs regarding the schemes. ASIC alleged that the operators of the schemes targeted Australian investors and self-managed superannuation funds.

In 2012, the Supreme Court of New South Wales held the Hobbs liable for financial misconduct relating to the operation of the schemes.  More than AU$55m was invested in investment funds in New Zealand, the United States, Hong Kong, Vanuatu, the Bahamas, and the Turks and Caicos Islands.

In 2013, the Supreme Court of New South Wales permanently banned Mr Hobbs from providing financial services and managing corporations in Australia and was also ordered to pay AU$500,000. Mrs Hobbs was banned from providing financial services for eight years in Australia, banned from managing corporations for six years in Australia and ordered to pay AU$20,000. An appeal by Mr and Mrs Hobbs in 2013 was unsuccessful.