FMA bans offer documents for $20m scheme

The Financial Markets Authority Te Mana Ta¯tai Hokohoko has banned offer documents for a $20 million funding scheme which promised investors a 50 per cent return over three years.

The One Management GP cannot raise money for The One in Longhorn Partnership Fund, which plans to build units at Flat Bush, south Auckland.

The business wanted the $20m as partial funding for a $210m scheme to build units at 38 and 48 Longhorn Dr in a land purchase not due to settle until December.

Yesterday’s move follows an earlier temporary freezing measure after the Herald asked the authority about the scheme.

The authority said it was concerned that communications about the offer “are likely to mislead or confuse prospective investors”.

Among other issues, the authority cited the level of investment risk involved, a guarantee by Tung Wei Ling and Manna Wang, references to a mortgage and returns payable.

“The promotional materials represented that the level of risk to investors was minimal, despite the security and guarantee referred to in the promotional materials likely providing little or no protection to investors,” the authority said.

Numerous references were made in the offer to a guarantee by Tung Wei Ling and Manna Wang “but it only provides temporary protection because it could terminate prior to repayment dates. The FMA considers the guarantee is likely to provide no protection to the Fund or investors in the Fund in the event of default by The One Longhorn”.

The order applies for two months and comes into effect on May 10.