FMA sinks teeth into Whimp

Bernard Whimp has provided the Financial Markets Authority (FMA) with an easy first scalp in Financial Markets Authority v Carrington Securities LP¹ and in the exercise of its new powers to deal with predatory low ball offers.

This is a good result for the FMA as it seeks to win public confidence in the new regulatory regime.

The context

The litigation related only to the most recent offers made by Whimp. These offered a price higher than the current share price but with payment spread over ten years in equal annual instalments. During that time, any dividends would go to Whimp.

The offered price was headlined at the front of the offer together with a favourable comparison to the recent market price on NZX and emphasis on the 'first in first served' limited period for the offer. Other important terms (including the spread payments) were set out in much smaller print on the reverse side of the document.