UPDATED: The Financial Markets Authority said today it had not issued a new interim stop order against American-based finance company Validus.
The FMA’s media relations manager, Andrew Park, said there was a technical error on the Authority’s website which re-loaded the same press release from February 15 and put the date April 17 on top of the original release.
The FMA apologised for the error.
Validus has been the subject of several warnings by financial authorities in New Zealand and Australia.
In February this year the FMA warned that there was a real risk of investor harm arising from activities of Validus and its associated persons, which it described as “dishonest and misleading.”
Under financial sector laws companies offering financial services, advice, or products need to be registered.
In previous events Validus has offered financial trading courses, payable in crypto currencies, along with various investment schemes, and payments for recruiting new members.
“The FMA reinforces its warning that the public should exercise caution in dealing with this company and its associates,” the Authority said.
Validus has targeted Islander communities in Auckland and has also expanded its operations to Tonga.
A number of Tongans have fallen prey to pyramid schemes, losing hundreds of thousands of dollars.
In February the Tongan government said it would investigate the company.
In November last year the Australian Securities and Investments Commission warned people not to deal with Validus.
It said the company’s operations showed classic signs of being a pyramid scheme.
“Validus is promoting investments to Australians that promise a 300% return,” ASIC said.
“The returns promised by Validus are unrealistic.”
Investigation
The Commerce Commission is also investigating Validus.
Vanessa Horne, General Manager of Fair Trading, said the commission’s investigation related to activities that may give rise to issues under the Fair Trading Act.
Pyramid schemes and investment scams are illegal in New Zealand.
“If an offer sounds too good to be true, it probably is,” Horne said.
Pyramid schemes could take many forms, but had the following essential elements:
They offered a financial return based on the payments made by new recruits.
The return depended on the continued recruitment of new members, not sales of a product or service.
The main motivation of many participants was the opportunity to make money by recruiting others.
“If people are involved in what they think is a pyramid scheme, our advice is to stop any ongoing involvement immediately, do not encourage other people to join, and make contact with the Commerce Commission,” Horne said.
Fired
Meanwhile, Kaniva News has been reliably told that some Tongan agents who worked by promoting and selling a French perfume company’s products in New Zealand known as Le Reve had been fired by the company because of their involvement with Validus.
Le Reve’s chief executive did not deny this to Kaniva News.
Phil Hobby said: “We have a loyal Tongan following in New Zealand because of the strong cultural affinity Tongans have with fine fragrance.
He also said that “due to privacy requirements I’m unable to discuss our dealings with any of our specific sales agents publicly by name”.
“However, I can certainly confirm my concerns regarding Validus. As long as your FMA is publishing warnings in relation to this Company, Le Reve will strongly encourage our people not to involve themselves with it. I’m glad to see from your website that we are in agreement on that”.
Some Tongans who became involved with scams and pyramid schemes which operated in Auckland and targeted the Tongan community about three years ago were dismissed from their jobs because of their involvement.
This included the pyramid scheme operator Mele Hea, who reportedly told a tribunal she had lost her job after a complainant Tionly Fatukala complained to her employer. Kaniva News has seen a letter dated July 26 about this issue.
