Securities Commission to call for disclosure statements of investment advisers and investment brokers

The Securities Commission has announced its intention to contact investment advisers and brokers to check their compliance with new investment adviser disclosure laws that were passed in October 2006.

From 29 February 2008 advisers' and brokers' disclosure statements must comply with the new disclosure laws. The Commission's Director of Primary Markets, Kathryn Rogers, has said "we expect advisers and brokers to comply with the law as soon as it takes effect... Investment advisers and brokers have had plenty of time to prepare new disclosure statements".

Ms Rogers has indicated "We first want to know whether each adviser and broker has a disclosure statement as required by the new laws. We will then review a sample of disclosure statements and advertisements for compliance with the new laws. The Commission will take enforcement action in appropriate cases".

The Commission can take enforcement action against advisers and brokers:

• who do not have a disclosure statement;

• whose disclosure statement does not contain the required information; or

• whose disclosure statement or advertising is deceptive, misleading or confusing.

The Commission has power to take actions, including orders to prohibit or correct a disclosure statement, or to disclose information or to temporarily ban an adviser or broker.

The following are criminal offences carrying fines ranging from $30,000 to $300,000:

• to not disclose information that the adviser or broker knows should be disclosed;

• to have a misleading, deceptive or confusing disclosure statement or advertisement; and

• to contravene an order made by the Commission.

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