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FMA castigates broker for misleading advertising

Chris Hamblin, Editor, London, 29 March 2021

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New Zealand's Financial Markets Authority has instructed Rockfort Markets, a foreign-exchange and contracts-for-differences broker that help HNWs trade on global financial markets, to remove or amend misleading advertising statements on its social media channels and website.

The FMA became aware that certain statements in Rockfort’s Facebook advertisements and on its website created the impression that trading in derivatives was “safe.” The FMA holds the same view of contracts for differences as many other regulators around the world, i.e. that they are "inherently risky."

The FMA saw that Rockfort was making other statements on its website that were likely to mislead investors or were unsubstantiated, including:

  • “We exceed the requirements of the legislation and keep separate client money from our operating money”, when keeping client money separate is a requirement of the legislative requirements for derivatives issuers; and
  • Rockfort is a licensed and regulated “forex and share broker,” when its licence is as a derivatives issuer and these services are not licensed in New Zealand.

It is a requirement for every advertisements of a regulated financial product offer to include a prominent statement that a Product Disclosure Statement is available. The FMA has seen that certain Rockfort advertisements did not include this statement, and that other advertising was inconsistent with it.

The FMA considered that Rockfort’s materials were likely to breach the FMC Act, specifically the ‘fair dealing’ provisions and advertising requirements for regulated offers. It raised its concerns with Rockfort earlier and the company took some steps to change its advertising, but it did not do enough.

The FMA issued a direction order to Rockfort under s468 FMC Act to make it remove the bad marketing. It says that it has now done so.

The company must also ensure similar and future marketing materials:

  • state clearly (and do not underplay) the risks involved with derivatives;
  • do not state that Rockfort exceeds regulatory requirements regarding the holding and application of investor funds;
  • do not state that Rockfort is licensed or regulated by the FMA to provide services or products not covered under its DI licence; and
  • state that a Product Disclosure Statement is available.

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