Investors better informed about low ball offers

News release
27 March 2014

FMA says in a report published today that new regulations are assisting investors to make better informed decisions about unsolicited or low ball offers.  The report also acknowledges that companies whose investors have been targeted have contributed to investors being better informed.

The Securities Markets (Unsolicited Offers) Regulations 2012 came into force on 1 December 2012 amid growing concern that investors were being encouraged to sell their shares and bonds at below market price.

Monitoring unsolicited offers and compliance with the new regulations was an important focus for FMA throughout 2013 because of the need to rebuild consumer trust in the market.

The Unsolicited Offers Monitoring Report released today by FMA notes that a decrease in complaints and in the types of offers being accepted indicate that the disclosure required by the regulations is helping investors to make more informed decisions about unsolicited offers. 

In particular, the report says, investors with large holdings appear less likely to accept unsolicited offers than those with small holdings. Also, deeper discounts to the market price appear to result in lower rates of acceptance.

However, investors continue to accept unsolicited offers despite being able to get more for their investments by selling through a broker. In some cases the difference between the amount received and market value is substantial.

FMA’s monitoring indicates that there is a good level of compliance with the regulations in regard to unsolicited offers received by investors. Instances of non-compliance have been relatively minor and, in all cases, rectified to FMA’s satisfaction.

FMA’s powers in regard to unsolicited offers were previously much more limited. 

Elaine Campbell, Head of Compliance Monitoring at FMA, said: “It’s good news that the new regulations and FMA’s stronger regulatory powers have resulted in investors being better protected.  We will continue to monitor unsolicited or low ball offers and take any enforcement action necessary, but the new rules seem to be working well.”

A copy of the Unsolicited Offers Monitoring Report can be found here.

Ends

Contact:
Johanna Bennett on 021 452 867 or [email protected]