New Zealand regulator orders Kalkine to stop sales calls after misleading conduct

Rick Steves

“We saw instances of Kalkine assuring prospective clients they would make money through stock investing with little or no regard to the inherent high risks and estimating clients could make monthly returns of 10-20% as a result of purchasing Kalkine’s research reports.”

The Financial Markets Authority (FMA) has ordered Kalkine New Zealand Limited to stop making outgoing sales calls to people in New Zealand following concerns about the entity’s misleading marketing conduct.

According to the regulator, Kalkine was the target of several complaints from members of the public regarding its marketing practices. This led the FMA to undertake a monitoring review, analyzing recordings of calls made by Kalkine sales representatives, and confirming that the content of those sales calls were “concerning”.

Kalkine holds transitional license from the FMA

Holding a transitional financial advice provider licence from the FMA, Kalkine has been responsible for several outgoing sales calls to persons in New Zealand offering the purchase of stock analysis reports, which provide buy, sell or hold recommendations.

The FMA found that Kalkine was likely to mislead prospective clients generally in relation to its advice service as it overstated the performance characteristics of its service and of certain financial products.

A number of fair dealing provisions in Part 2 of the Financial Markets Conduct Act 2013 and the requirements of Code Standard 2 of the Code of Professional Conduct for Financial Advice Services protect New Zealand residents from such conduct.

As such, the financial watchdog ordered Kalkine not to make outgoing sales calls to persons in New Zealand until the FMA is satisfied that Kalkine’s compliance processes are sufficient for outgoing sales calls to resume.

The direction requires Kalkine to provide the FMA a report within 20 working days demonstrating how the company will provide balanced information on risk and return to potential clients and will ensure all future communications do not include representations that are likely to mislead or deceive consumers, or that are unsubstantiated.

The FMA also found that Kalkine made misleading statements about where it is based: they said the company was based in Auckland, but the representatives did not clearly identify that the call was being made by an offshore related company of Kalkine on behalf of Kalkine New Zealand.

Little or no regard to the inherent high risks of stock investing

James Greig, FMA Director of Supervision, said: “We saw instances of Kalkine assuring prospective clients they would make money through stock investing with little or no regard to the inherent high risks and estimating clients could make monthly returns of 10-20% as a result of purchasing Kalkine’s research reports. In other cases, Kalkine made unsubstantiated statements about the success of its recommendations and said that markets would perform strongly in the near future, despite returns from equities being uncertain and volatile by nature.

“The overall impression created by Kalkine was that customers who chose to subscribe to its advice service could expect high and predictable returns, but no balancing comments were provided. It is unacceptable for a financial advice provider to make misleading statements when marketing its service. Of particular concern, Kalkine’s representations could entice people who may not be aware of the risks of investing into purchasing an advice subscription, and potentially financial products that are not appropriate for them. This can lead to significant financial loss, cause distress, and undermines confidence in New Zealand’s financial advice sector.

“Our direction is the appropriate regulatory response as it effectively pauses Kalkine’s telemarketing operations in New Zealand until it can satisfy us that it has improved its practices.”

Kalkine has engaged constructively with the FMA throughout the regulator’s inquiries.

Read this next

Digital Assets

Centralized exchanges are 10 times more popular than DEXs in Western Europe

Western European traders are found to prefer centralized exchanges over decentralized ones as CEX traffic outpaces DEXs by a factor of ten.

Market News

Stock Market Analysis: Is NVDA Losing Its Leadership?

Since the beginning of the week, the S&P 500 Index (US500) has seen a modest increase of about 0.58%, whereas NVDA’s share price has experienced a decline of approximately 3.8%. This recent divergence raises concerns among Nvidia stock investors — could it signify a loss of NVDA’s market leadership?

Industry News

ESG: Australian regulator wins first greenwashing court case against Vanguard

Vanguard admitted that a notable portion of the securities within both the Index and the Fund did not undergo the promised ESG scrutiny.

Fintech, Uncategorized

BitMEX integrates HALO from Solidus Labs for cross-market surveillance

“The recent approval of the Spot Bitcoin ETF has piqued the market’s interest. As a result of price volatility, the trading volumes for crypto derivatives have gone up substantially. HALO, with its advanced technology and crypto-native detection architecture, will enable BitMEX to smoothly and safely scale trade surveillance across its increased trading volumes and provide the necessary safeguards for new product launches.”

Reviews

IUX Broker Review

IUX, recently rebranded from IUX Markets, stands as a multi-asset Forex broker recognized for its regulatory compliance across various jurisdictions.

Industry News

Horizon Software rebrands to Horizon Trading Solutions

“Horizon Trading Solutions has seen accelerated global growth over the past year to meet the rising demand for our trading solutions and built-for-purpose technology offering. The choice to rebrand represents a key part of this development, while maintaining our heritage and history in the industry.”

Market News

USDJPY has surged to levels last witnessed in 2022. Should we consider opening a short position?

The recent resurgence of the US dollar has propelled USD/JPY to new heights, touching levels not seen since 2022. This surge comes against the backdrop of stable short-term yields and ongoing economic data that fails to signal a significant slowdown, prompting questions about the extent of current monetary easing measures.

Digital Assets

DED Trends on Twitter After Memecoin Snapshot Announcement

Polkadot-backed community coin #DED, made it to the trending charts on X, demonstrating community’s engagement and interest behind the memecoin. 

Digital Assets

BlockDAG Presale Nears $10 Million Amid Toncoin’s Momentum, Green Bitcoin’s Presale, and the Rise of Other Top Cryptos

This article will examine three top trending topics: Toncoin’s potential, Green Bitcoin’s innovative presale, and BlockDAG’s sustainable mining approach. These cryptocurrencies take centre stage for their uniqueness and innovation.

<