The Financial Markets Authority is mulling what action it could take against Blue Chip after the Supreme Court ruled it breached the Securities Act with a scheme to sell apartments in Auckland.
A group of investors in Blue Chip have won their Supreme Court appeal against being forced to buy apartments in Auckland that were originally to be funded with assistance from the failed finance group.
"Now that the Supreme Court has ruled in favour of Blue Chip investors, FMA will be looking at the judgment very carefully and considering whether there are any steps it can take to assist investors," an FMA spokesman said.
The investors had been knocked back by the High Court and Court of Appeal in seeking to be excused from completing the purchase of apartments in the Barclay, Bianco and Icon apartment blocks in central Auckland.
They had argued that when Blue Chip marketed its investment schemes, it was offering securities to the public in terms of the Securities Act 1978 and was required to provide a prospectus.
In the Supreme Court, Justices Sian Elias, Andrew Tipping, John McGrath, William Young and Noel Anderson agreed that the appellants' Securities Act arguments "are correct".
The Supreme Court also held the developers of the apartments to be issuers in terms of the Securities Act, "giving rise to entitlements to relief" under the Act.
"We see the Blue Chip products as providing mechanisms by which Blue Chip sought and obtained financing from the public," the judgment says.
"It is true that they were also buying apartments but under the investment schemes the apartments had a very limited function. Provided all went according to plan, the investors were never to occupy the apartments
When the Blue Chip Group collapsed in 2008 the developments, by separate companies, went ahead and the investors faced difficulties in raising the necessary funds.
They had signed two sets of agreements - the agreement to buy the properties and a separate arrangement with Blue Chip under which they were entitled to financial returns.
NZN
