BT holds out for NZ law change
BTFinancialGroupmay be exonerated from reimbursing up to 50,000 investors in New Zealand for alleged breaches relating to document-filing with the NZ Securities Commission.
The move comes despite a case against it gathering pace last week following the High Court in Wellington ordering the matter be heard through a class action of “representative defendants”.
However, due to proposed changes to the Securities Act 1978 (NZ), BT — along with all other Australian Registered Managed Investment Schemes (ARMIS) in New Zealand — may not have to annul its products, as is the case under existing law, and refund client investments, plus 10 per cent interest a year from the date of subscription, as the amended legislation will offer more flexibility.
Westpac New Zealand, along with other industry stakeholders, presented to a NZ Parliamentary Select Committee last Thursday in relation to the proposed change, which will be retrospective and will therefore allow BT to rely on it in the class action, which was first reported byMoney Managementin July.
“We believe the supplementary order paper will provide both issuers and investors with clarity, as remedies for material breaches will now [under the proposal] have to be determined by a court of law rather than a blanket remedy involving the investment becoming void and the investor being reimbursed, plus 10 per cent,” Westpac New Zealand media relations manager Paul Gregory says.
This could save BT and the other 60 fund managers likely to be impacted significant sums of money, says Auckland-based boutique commercial law firm Lowndes Jordan partner Graham Jordan.
“It [the proposal] provides a new remedy. If there is a breach of the requirements the issuers of the securities can go to court to seek a relief order and if granted it will mean that they don’t have to cancel the contracts,” Jordan says.
“There are initially 29,000 investors involved but some of those are underlying investment trusts, so the total number could be up to 50,000,” Jordan says of the BT case.
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