FMA Censures Jarden Securities for Derivatives Issuer License Breaches by OM Financial - BrokersView
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FMA Censures Jarden Securities for Derivatives Issuer License Breaches by OM Financial

Oct 14, 2021
Fazzaco

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The New Zealand Financial Markets Authority (FMA) announced today it has formally censured Jarden Securities Limited (Jarden) for contraventions by OM Financial Limited (OMF) as a licensed derivatives issuer (DI), for OMF co-mingled derivative investor money with its own, a breach of its DI obligations.

The regulator elaborated that OMF has merged with Jarden in March 2021. Hence, the amalgamated entity inherited the property, rights and liabilities of both OMF and Jarden, including the DI licence. As a result, the FMA has censured the amalgamated entity.

The financial watchdog has firm grounds that OMF has breached the Financial Markets Conduct 2013 (the FMC Act) between September 2015 and July 2020, prior to the amalgamation with Jarden. First NZ Capital Securities (now Jarden) acquired OMF in 2019. OMF self-reported the issue to the FMA in September 2020.

In detail, the violations related to OMF transferring its own money into the trust account designated to hold derivative investor money. This involved at least 150 payments totalling $US1million. Derivatives issuers may deposit money into the trust account to safeguard against the risk of a shortfall. However, the FMA found that the money deposited by OMF was made for business-related payments to third party providers, not to safeguard against the risk of a shortfall arising.