The Financial Markets Authority (FMA) of New Zealand, announced this Wednesday that it has accused a man of soliciting funds from investors for a foreign exchange (forex) service which didn’t exist.
The New Zealand regulator has charged the man, who has not been named, with offenses under the Crimes Act and the FMA Act at the Manukau District Court. The watchdog alleges that he contacted people and convinced them to ‘invest’ by transferring money into bank accounts he controlled.
Then, after incorporating a company, he continued to cold-call residents of New Zealand to promote the non-existent FX service. By doing this, he managed to solicit just under NZ$100,000 ($65,431), the FMA states.
According to the statement published today, neither the man accused of the fraud nor his company was authorized or licensed by the FMA. Nonetheless, he allegedly told the people who he tricked the money out of, that he would invest the funds on their behalf.
Specifically, the man has been charged with:
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- Sixteen charges of obtaining by deception under Section 240 of the Crimes Act 1961
- Three charges of dishonestly using a document under Section 228 of the Crimes Act 1961
- Two charges of obstruction of the FMA’s powers under Section 61 (1) (b) of the Financial Markets Authority Act 2011.
Man Accused of FX Scam Could Face 7 Years in Jail
If found guilty, the man could incur a maximum penalty of 7 years imprisonment and a fine worth NZ$300,000 ($196,308). The first hearing is scheduled for the 12th of June this year.
Commenting on the issue, Karen Chang, FMA Head of Enforcement said: “The FMA will take enforcement action where it sees conduct at the perimeter of financial markets that harms investors or could damage the reputation of New Zealand’s financial markets.”
“Investors should always check if the person or company they are dealing with is licensed by the FMA, which provides basic protections.”
In addition to the initial wrongdoing, the FMA has also accused the man of prohibiting it from using its powers during the investigation. This was achieved by giving false evidence when responding to a notice that was issued to him under section 25 of the Financial Markets Authority Act 2011.
The New Zealand agency has not revealed the name or business of the man accused, as it is not clear whether name suppression will be sought.