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David Ross facing FMA charges alleging breaches of legislation

Failed fund manager David Ross of Ross Asset Management faces three charges from the Financial Markets Authority alleging breaches of financial markets legislation, adding to his existing Serious Fraud Office charges.

The Wellington-based financial adviser faces one charge under the Financial Service Providers Act of providing a financial service when he was not registered for that service, the FMA says in a statement. The maximum penalty is 12 months' imprisonment or a $100,000 fine.

He is also charged under the Financial Advisers Act with knowingly making a false or misleading declaration or representation to the authority for the purpose of obtaining authorisation to become an authorised financial adviser. The maximum penalty is a $100,000 fine.

A third charge under the Financial Markets Authority Act alleges he supplied information or produced documents to the authority which he knew to be false or misleading. The maximum penalty is a $300,000 fine.

"Today's charges allege that David Ross showed a disregard for the financial adviser regime by misleading the FMA in his application to become an AFA," Belinda Moffat, FMA head of enforcement, says in the statement.

"These charges send a strong message that there are serious consequences if false information is provided to FMA for any license, and it reinforces the need for integrity in the system."

Earlier this month, five Crimes Act charges were laid by the SFO against Ross after a joint investigation with the FMA. The investigation into Ross Asset Management and related entities started in October when the FMA received complaints from investors who were unable to withdraw funds.

Mr Ross will appear in the Wellington District Court to face the latest charges on July 5 relating to the financial markets charges, and on July 2 on the Crimes Act charges.

(BusinessDesk)

Comments and questions
5

If the FMA did its job properly, Ross would have been stopped from practicing a few years ago!

Strong message of serious consequences? Kinda like telling a kid who is sent to his room that he cannot have his ice cream!

Whole problem with FMA is that it seems to act only after the fact.

They acted as soon as there was a complaint. Ross relied on investors' trust, and limited call for fund withdrawal, to keep up the charade. The problem is lack of regulatory oversight and prudent audits.

Ross won't care because penalties here are a joke. A few years from now he will be sitting on a beach in Hawaii with his feet up living the high life.

FMA needs to act before the complaint.

Otherwise, it is bottom of the cliff action as per usual.

Thing is - FMA gave stamp of approval to David Ross by certifying him, lulling investors into a false sense of security.

You would think that the legislation would have systems in place that a person making an application to become an Authorised Financial Adviser could not make false declarations in that there should be at least referees endorsing the application .You would think that every Financial Adviser would be required to be interviewed.What is the FMA for if this is not its fundamental activity in registering an Adviser.