Booster and the Financial Markets Authority (FMA) are lawyering-up for what could be a multi-year legal battle after the regulator laid serious civil charges against the Wellington-headquartered firm last week.
The FMA is seeking “declarations of contravention, pecuniary penalties” and “an inquiry into damages” over 75 alleged governance breaches surrounding the Booster Tahi private wine company investments.
“Each contravention has a maximum penalty of $600,000 for the entity, and $200,000 for an individual,” the regulator says.
As well as corporate charges, the FMA has filed against Booster chief, Allan Yeo, along with senior executives or directors Paul Foley, Brendon Doyle, Nicholas Craven and David Beattie.
The Booster case will likely prove one of the most complex litigated by the FMA given both the number of alleged breaches and technical legal points involved – some of which are set to be tested in court for the first time.
Margot Gatland, FMA head of enforcement, said in a release that the “allegations are centred around important governance provisions of the FMCA [Financial Markets Conduct Act], including fiduciary duties of managers and related party transactions”.
With more than $7 billion under management, including about $4.5 billion in its KiwiSaver scheme, Booster has been one of the more successful NZ-owned boutiques – garnering support from third-party advisers through competitive incentives as well as technology and practice management help.
Booster launched the Tahi fund more than six years ago to invest in private assets including wine companies – later spinning out the land and business assets into separate funds.
The FMA is usually loathe to embark on court actions given the costs and risks at stake – preferring to negotiate agreed statements and any remediation with firms over alleged breaches
But the regulator has lodged court wins previously, including: market manipulation charges against then Milford Asset Management portfolio manager, Mark Warminger, in 2015; and, a 2011 guilty plea from Peter Huljich over misleading investors in the Huljich KiwiSaver scheme.
In 2011 Fisher Funds bought the Huljich KiwiSaver scheme, which reported about $400 million under management at the time, for almost $21 million.
No court dates for FMA v Booster have been set.