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

Executive Moves

Scope Markets promotes James Hughes to head of marketing

Belize-based FX and CFDs brokerage Scope Markets has promoted James Hughes, who until recently was its head of brand, to take on an expanded role as the company’s global head of marketing.

Retail FX

Fraudsters clone Financial Commission’s website, two ex-members under suspicion

The Financial Commission, an industry-specific dispute resolution service that caters to the financial services industry, today announced that it believes a clone website has been impersonating its membership roster.

Retail FX

CMC Markets warns of operational challenges in Q1

CMC Markets PLC (LSE:CMCX) said in a trading update for the fiscal year 2023 that February and March posed a more challenging environment with lower equity volumes and a higher proportion of lower margin institutional trading activity.


Why Is Digital PR So Important for Financial Service Providers? Buzz Dealer’s CEO Uri Samet with the Answers

Digital PR is all about spreading your message faster, wider, and stronger in the online world, through proper SEO, link-building, and organic and paid social media work.

Inside View

Why And How Are Virtual Cards Disrupting The Finance Industry

Virtual cards have the potential to revolutionize the finance industry by providing faster and more secure payments, wider acceptance, and eco-friendliness.


Sweat Economy’s Oleg Fomenko on upcoming launch of Move-to-Earn app in the US

With the crypto winter’s biggest hurdles seemingly behind us as the prices of Bitcoin et al. climb the charts again, the Web3 economy is preparing for the next phase.

Industry News

OptionMetrics acquires Woodseer to add dividend forecast data for equities

“The addition of Woodseer’s product suite will enhance our ability to serve financial market stakeholders and academic institutions in their analysis of equity market performance and risk.”

Digital Assets

Metacade raises over $14.7M as presale set to close in 72 hours

Metacade, one of the most exciting GameFi ventures of 2023, has now raised over $14.7m as the presale goes into its final hours. With over 90% sold, the project expects to sell out ahead of their scheduled closing time, set for Friday 31st March at 23:59 Pacific Time. 

Digital Assets

Coinme launches Circle’s USDC on Stellar network

“By enabling USDC on Stellar in the Coinme wallet, anyone with cash can now utilize the Stellar blockchain to access a fully-backed dollar digital currency. People can now swap their cash for USDC on Stellar and send it in seconds for the cost of a penny.”