The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has issued an interim stop order on a scheme linked to a Flat Bush development.
The FMA on March 28 ordered a property investment fund to stop marketing an offer in relation to The One in Longhorn Partnership Fund (‘the Fund’), which is only open to wholesale investors, including eligible investors.
A stop order is a regulatory tool the FMA can use to stop or prevent advertising or disclosure that is false or misleading, or is likely to confuse consumers or investors, on matters that influence their investment decision.
Radio NZ reported the One Management Group had been marketing the fund in sponsored articles under the heading of “50 percent fixed returns over three years for wholesale investors”.
“The minimum investment in the development was $250,000 with a maximum $10m, for a maximum 36 month period, with investors to be paid a fixed 50 percent return before tax over that period, regardless of whether the development is ultimately completed or profitable,” RNZ said.
The FMA can issue an interim order – which typically lasts for 15 working days – while it considers if a full stop order is warranted.
The FMA is concerned about statements by The One Management GP Limited regarding the fund’s returns payable to investors and the level of risk in the investment.
The interim stop order prohibits The One Management GP Limited from:
- making any offers, issues, sales, or other acquisitions or disposals of units in the Fund;
- accepting applications for units in the Fund;
- distributing any restricted communication that relates to the offer of units in the Fund (i.e. removing any relevant internet advertising/websites, social media posts, sponsored advertising content and billboards); and
- accepting further contributions, investments, or deposits in respect of units in the Fund.
Additionally, James Law Realty, an entity involved in the promotion of the Fund, is prohibited from distributing any restricted communication that relates to the offer of units in the Fund.