A New Zealand finance trader accused of using over $2.5 million of investors money for personal use and to repay other investors has had charges laid against him by the Serious Fraud Office (SFO).
Gregory Alan Arnott, 49, a self-employed options trader trading under Derivatek New Zealand, had been trading on behalf of New Zealand clients on the Australian Stock Exchange (ASX).
On Tuesday he was charged with five counts of theft by a person in a special relationship and five counts of making false statements as a promoter, a statement from the SFO says.
It is alleged Arnott used about $NZ2.5m of investors money to secure a personal loan of $20m and repay money owed to other investors.
The SFO also alleges Arnott sent out false statements to investors to cover his tracks.
Acting SFO chief executive, Simon McArley, says Arnott's case highlighted a growing problem within the industry in which investors put too much trust in traders without analysing how their money was being invested.
"This is a growing problem and highlights the importance of looking beyond personal connections and carefully assessing the risk of investments," he said.
"There is considerable danger in basing investment decisions on the recommendation of a relative, friend or acquaintance rather than careful investment analysis."
Related charges will likely be laid against another person.
Arnott is due to appear in Auckland District Court on November 13.
Arnott has been a self-employed stockbroker and options trader since 2006 and has traded on the New Zealand Stock Exchange (NZX) and ASX over this period.
He is the sole director and shareholder of Australian Securities (NZ) Ltd, Derivatek NZ Ltd and Derivatives Management Ltd.