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THE second important item of good news for investors came from the financial market regulator, the FMA.

It has recognised the threat to thousands of New Zealand investors, and billions of dollars of investor money, posed by the loose laws that have given charlatans access to investor money, away from the oversight of regulators.

I refer here to the lazily and incompetently designed “wholesale investor” laws which have resulted in billions of dollars being sucked into dodgy investments.

The du Val property fund is just one small example of a fund that targeted “wholesale investors” yet was able to escape intervention while it self-destructed. There are many such funds, some run by charlatans previously convicted of crimes, banned from making public offers, banned from being directors, or bankrupted, having left creditors facing losses of millions or even tens of millions.

How could this ever have been allowed to happen?

The answer may be because bad law was open to arguable interpretations, allowing greaseball lawyers to teach “entrepreneurs” to exploit loopholes.

Equally ugly lawyers then reap fees “protecting” their clients.

The great 2025 news is that the FMA, having tried hard to guide investors away from loopholes, has now accepted it needs help to stop these miscreants. The FMA will ask the High Court to define the “wholesale” laws to ensure the regulator can build a moat that prevents greedy people from creating their little castles with other people’s money.

We should all applaud the FMA. Surely the courts will co-operate.

New Zealand savers simply cannot be left to be raided by charlatans who have been enabled by poorly-drafted law.

There are any number of property syndicators and fund managers who have exploited such loopholes. Perhaps many of these people did not plan to destroy money. It is conceivable that many, like the couple who created du Val, simply were not bright enough to understand that revenue is not the same as tax-paid profit, and that in property development, “profits”, so poorly described because of accounting nonsense, should not be distributed until developments are completed after fully providing for all future liabilities (such as repairing deficiencies).

Such poor business knowledge is widespread and is particularly obvious in the property section. Indeed it has been since the 1980s. In this area the media has some responsibility, having often failed to understand that gross assets do not indicate wealth, and that “valuations” are just a guess of a future sale price, the guess often massaged to suit the property owner.

So if du Val has a valuation of a half-completed project that valuation might be, indeed is likely to be, completely irrelevant, certainly not used to estimate the nonsense we see in “rich lists”. If the owners are spending the IMPLIED profit before it is realised, they are living on other people’s money, not dividends. If they are spending revenue as though it were profit, they might simply be hopelessly incompetent rather than common thieves.

Investors funding such developments need the support of expert overseers armed with very precise law giving the regulators the right to intervene as soon as they observe misuse of funds. Misuse begins the day that lifestyles are based on other people’s money.

I loudly applaud the FMA for recognising the need for clarity about a law I have often criticised. I have referred to regulators some evidence that self-interested accountants and lawyers have certified as “wholesale” many investors who had wealth but absolutely no idea of understanding the investment risk.

For example, a person who has inherited a large sum may well have the money to qualify as a “wholesale” investor, as might someone who wins a large lottery prize. The likelihood of either person being wise enough to forego the support of regulators, or regulatory supervision, is next to nil.

Neither would it be likely that such a “rich” person had any idea about the history of charlatans who described themselves as “experts”, having previously cost their creditors through their business failures.

It will be great news when one of those rare High Court judges, with genuine commercial skills, gets to offer guidance to the regulators and to investors.

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ON a much smaller scale there was more “good news” when the clever NZ software service company, Orion Healthcare, was sold to a bold, committed Canadian company for $200 million, the sale reported in recent days.

Orion Healthcare, created by the software genius Ian McCrae, will be remembered for its public NZX listing 10 years ago. It was described then as a clever technology company with global potential requiring years to convert its potential into monetary success.
Sadly, the NZ funds management sector, with Brian Gaynor’s Milford a notable exception, could not see past the somewhat naïve financial skills of McCrae and would not provide the time or support for McCrae’s vision to be monetised. So McCrae bought the company back, continued with his vision, and has now sold part of Orion Healthcare to the Canadians, accepting that his personal health may not provide the time for him to see his company reach its potential.

One could argue the sale is another example of a New Zealand technology company receiving inadequate NZ capital market support. But I would argue that McCrae’s genius and the value of his contribution to the future of healthcare is recognised by the sale.

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SO these are three items of good news to boost our spirits as NZ seeks to recalibrate after 15 years of quite dreadful governance, in part caused by the failure of the public sector to set its sights on incremental, long-term improvements.

Rennie is quoted as saying that now must be the time to start afresh, recognising the errors of recent years and aim to recalibrate, making tough decisions. If his initiative succeeds, NZ might become an outlier, for there is ample evidence of short-termism and Band-Aid mentality in the world’s biggest economies.

Few talk about the remarkable global statistics, according to The Financial Times, of the rising number of young people who do not want to work, irrespective of availability, or not, of jobs (20-40%).

Few talk about the huge switch of young voters to extreme left or right, expressing utter dissatisfaction with the status quo.

Few talk about the madness of devaluing currencies, or the compounding costs of ever-increasing debt.

Few talk about the finite resources of the planet.

But at least we will make a start if Rennie and Treasury can convince New Zealand that structural deficits are the signal that change must start now.

Hope springs eternal.

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THERE was another item of good news I will share.

There are numerous “experts” ready to stand up and condemn our banking systems. The subject of the day seems to be who should be responsible when investors are scammed and/or hacked. The following happened within our family in recent days.

A text warned that a credit card was being cancelled because of the fear of illegal use. The card, with a minimal credit limit, is used only for online purchases, the limit set to minimise fraud.

The family member had been charged US$75 for something never purchased. The ANZ noted the “purchase” was made in the small hours after midnight and that there was no history of purchases at such an hour. It stopped the card and sought confirmation that the card was being used by a hacker.

A very helpful phone conversation with someone who spoke clearly and carefully followed, after a wait of 90 seconds. The debt was reversed and within days a replacement card sent.

All of this occurred during a weekend.

Banks, like retirement villages, are often lacerated by vacuous puffballs feigning expertise. In this case the ANZ deserves a hat-tip for repairing a problem it did not create.

Heaven help New Zealand if goofy public sector peahens or headline-chasing peacocks ever undermine our banks. If only those attention-seekers could understand the value of rich friends!

May 2025 be a year in which more good news can be identified.

Chris Lee

Chris Lee & Partners




The information contained within this newsletter is of a general nature and is not Financial Advice, as defined in the Financial Markets Conduct Act 2013. All readers and investors should seek advice, from an authorised person, based on their own circumstances, before investing.

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