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Financial Markets Conduct Act 2013

Enforcement, liability, and appeals - Civil liability - Declarations of contravention and pecuniary penalty orders

491: Guidance for court on how to determine gains made or losses avoided for purposes of maximum amount

You could also call this:

"How courts calculate gains or losses when things aren't fair in financial deals"

Illustration for Financial Markets Conduct Act 2013

When a court is working out how much money someone has gained or avoided losing, they have to follow some rules. You are considered to have made a gain if you buy a financial product for less than it is worth. You are considered to have avoided a loss if you sell a financial product for more than it is worth.

The amount of gain or loss is the difference between what you paid or received and what the product would have been worth if everything had been done fairly. This means if some important information had been available to everyone, or if someone had not been misleading or deceptive, the product's value would have been different.

The court can still decide you have made a gain or avoided a loss even if it does not exactly follow these rules, and they can also decide the amount is more than what these rules say.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091712.

Topics:
Money and consumer rights > Banking and loansMoney and consumer rights > Consumer protectionBusiness > Fair tradingBusiness > Industry rules
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490: Maximum amount of pecuniary penalty, or

"The Maximum Amount You Might Have to Pay if You Break the Rules"

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492: Considerations for court in determining pecuniary penalty, or

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Part 8Enforcement, liability, and appeals
Civil liability: Declarations of contravention and pecuniary penalty orders

491Guidance for court on how to determine gains made or losses avoided for purposes of maximum amount

  1. For the purposes of section 490(1)(b), a person must be treated as—

  2. making a gain if the person acquires a financial product for less than its value:
    1. avoiding a loss if the person disposes of a financial product for more than its value.

      1. In this case, the gain made or loss avoided is the difference between the consideration paid or received (as the case may be) and the value the financial product would have had at the time of the issue or sale if,—

      2. in the case of a contravention of any of sections 241 to 243, the material information had been generally available to the market; or
        1. in the case of a contravention of section 262 or 265, the conduct, statement, or information had not been misleading, deceptive, or false; or
          1. in any other case, the contravention had not occurred.

            1. This section does not—

            2. limit the circumstances in which the court may find that a person has made a gain or avoided a loss; or
              1. prevent the court from finding that the amount of the gain made, or the loss avoided, by a person exceeds an amount calculated under this section.

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