Some NZ foreign exchange broker went bust last week, leaving assorted suckers out of pocket. Ordinarily I wouldn't care: the market is a scam, and you play at your own risk. But it turns out that we had a very sleepy watchdog:
The Financial Markets Authority knew bust forex broker Global Brokers NZ was in breach of financial regulations, but appears to have taken no action.
Information provided to Fairfax under the Official Information Act lists Global Brokers NZ among 3892 companies that failed to comply with the Financial Reporting Act as of March 2013.
The act required all subsidiaries of foreign companies to file audited financial statements to the Companies Office or face potential criminal sanction by the Companies Registrar.
Global Brokers NZ has never filed financial statements. Its current owners - Epicus Corporation and XT International Holdings, both registered in the British Virgin Islands – have been shareholders since October 2011.
Under the act, directors failing to file accounts faced infringement fees of $7000 each, as well as fines of up to $100,000 each if prosecuted and convicted.
Or, to put this in English: the Financial Markets Authority knew about almost 4,000 crimes and never bothered to prosecute any of them. Which, regardless of what you think of the market they regulate and the level of protection owed its participants, is a basic case of a government organisation failing to do the job we pay it to do, and in a way which seems designed to enable corporate crime and fraud. Someone really needs to be held accountable for that.