New Zealand’s Financial Markets Authority (FMA) has sanctioned Jarden Securities for regulatory and license breaches. The financial watchdog announced that it has issued sanctions for contraventions by OM Financial Ltd (OMF).
According to the FMA, OMF beached its DI obligations by co-mingling derivative investor funds with its funds.
The watchdog explained that Jarden Securities was censored because it inherited the property, rights, and liabilities of OMF when it integrated the entity. And according to FMA’s report, the breach occurred between September 2015 and July 2021, which was before the merger of the two firms.
OMF has gone through a series of ownership phases. It was initially owned by. OMF was initially owned by NZ Capital Securities before it was bought by the firm in November 2019.
The Breach Was Self-Reported Last Year
According to the official announcement, OMF transferred its funds into the account initially meant to hold clients’ money. The company successfully executed 150 payments worth about $1 million. But the breach was self-reported to the watchdog in September 2021.
FMA also acknowledged that OMF self-reported the issue. The regulator stated that such self-reports are minimum requirements expected from organizations.
It noted that the report will not prevent the censorship of the company due to the degree and nature of the situation.
The FMA issued instructions to the OMF to separate clients’ funds from the company’s funds. OMF can protect the funds against the risk of the shortfall by depositing funds into the trust account.
However, the regulator argued that OMF made business-related payments to third-party providers using funds deposited by clients.
Clients’ Funds Are Safe
FMA Director of Supervision, James Greig, said that all clients’ funds are safe. However, he stated that the company put the investors’ funds at unnecessary risk as the separation processes weren’t primed.
As a result, the violation has attracted a censor because of the number and value of transactions, as well as the long periods the issue occurred
FMA has been very busy lately, as it intensified efforts to keep the financial services industry safe for investors in New Zealand. The regulator censored derivatives issuer Firma Foreign Exchange Corporation (NZ) Limited for several violations.