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Financial Markets Authority Act 2011

General information-gathering and enforcement powers - FMA may exercise person’s right of action

34: FMA may exercise person’s right of action

You could also call this:

“FMA can take legal action for someone else to protect the public”

The Financial Markets Authority (FMA) can take legal action on behalf of someone else if they think it’s important for the public. They can do this in two ways:

  1. They can start a new case against a person who works or used to work in financial markets.
  2. They can take over a case that someone else has already started against a person who works or used to work in financial markets.

The FMA can only do this for certain types of cases. These include cases about financial market laws (but not criminal cases) and cases where someone is asking for money because of things like breaking rules, fraud, or not doing their job properly in financial markets.

When the FMA decides to take legal action, they must think about what’s best for the public. They also need to think about the person they’re helping, that person’s shareholders and people who owe them money, and anyone who has bought financial products from that person.

The FMA has to think about several things when deciding if taking legal action is good for the public:

  1. Their main job of making sure financial markets work well.
  2. How the case might change how people in financial markets act in the future.
  3. If using their time and money on the case is a good idea.
  4. If the case is about important issues in financial markets.
  5. Whether the person they’re helping would start and continue the case on their own.
  6. Any other things they think are important.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3231712.

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Part 3 General information-gathering and enforcement powers
FMA may exercise person’s right of action

34FMA may exercise person’s right of action

  1. If, as a result of an inquiry or investigation carried out by the FMA, the FMA considers that it is in the public interest for it to do so, the FMA may, in accordance with this subpart,—

  2. exercise the right of action that a person (person A) has against a person who is or has been a financial markets participant by commencing and controlling specified proceedings against the person who is or has been a financial markets participant; or
    1. take over specified proceedings that have been commenced by a person (person A) against a person who is or has been a financial markets participant for the purpose of continuing the proceedings.

      1. In this subpart, specified proceedings means any of the following kinds of proceedings:

      2. proceedings under, or in respect of, any financial markets legislation (other than criminal proceedings):
        1. proceedings seeking damages or other relief for a contravention, an involvement in a contravention, fraud, negligence, breach of duty, or other misconduct, committed in connection with a matter to which the inquiry or investigation referred to in subsection (1) related.

          1. In exercising a power under this section, the FMA must act in the public interest, but (subject to that duty) may take into account the interests of—

          2. person A; and
            1. the shareholders, members, and creditors of person A; and
              1. if person A is an issuer, any product holders of financial products issued by person A.

                1. Repealed

                2. The FMA must, when considering whether exercising a power under this section is in the public interest, have regard to—

                3. its main objective under section 8; and
                  1. the likely effect of the proceedings on the future conduct of financial markets participants in connection with the financial markets; and
                    1. whether exercising the powers is an efficient and effective use of the FMA’s resources; and
                      1. the extent to which the proceedings involve matters of general commercial significance or importance to the financial markets; and
                        1. the likelihood of person A commencing the proceedings (if those proceedings have not yet been commenced) and diligently continuing the proceedings; and
                          1. any other matters it considers relevant.

                            Notes
                            • Section 34(2)(b): amended, on , by section 66(1) of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                            • Section 34(3)(c): replaced, on , by section 66(2) of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                            • Section 34(4): repealed, on , by section 66(3) of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).