The Big, Big Securities Report . . But Is It Any Good? | securities law, nz law, nz securities law, securities commission
Securities law has been having bad hair days for as long as most of us can remember. Blowing all over the place, no one there to do the tidying up, it seemed, and all sorts of new-fangled product to get things under control. And now we have a spanking new discussion document that’s landed on our desks like a report from Sir Geoffrey Palmer – all 400 pages of recommendations for reform of the Securities Act 1978 and other regulations. The Ministry of Economic Development document is using its document to find out where and how to regulate securities markets, dealing with key issues like exemptions, disclosure obligations and the powers of the newly proposed Caped Crusader, the Financial Markets Authority (FMA). These are all important issues and history might tell us that they will fail, but then history can be boring like that. If a widespread reform of securities law is going to work then the MED document will need to not only promote sensible discussion but also lead to sensible law. And unfortunately one does not necessarily follow the other. Already, reform in the financial adviser area has been a mess with its multifarious applications that turned it into the classic, kiwi patch-up job with five rounds of amendments. Quite how or what it will do in terms of delivering value to those involved in the financial services industry (and everything touching it) We’re not sure. Hence, reform in more significant securities area is highly important economically as much as legally. There’s a risk of over-regulation, just as there has been the fallout from under-regulation. Schemes like the Blue Chip property scheme, otherwise likely to fall outside the Act’s application, could be regulated. There are important issues like disclosure requirements, directors’ duties and the like that must be clarified. There is the distinct likelihood that directors will face criminal offences as they do in Australia under the Australian Investment and Securities Commission legislation. And that begs the question: Is much of this proposed industry-specific reform any better than the better and more efficient enforcement of legal obligations generally – be they directors, lawyers or anyone else charged with legal responsibilities?
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