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Citizens' Advice Bureau

Investment watchdog

What are securities?
Investing and risk
Watching the securities markets
People on the Securities Commission
Making New Zealand a better place

Investment is very important for New Zealand. Investors help finance the industries and businesses that create jobs and wealth for the country.

What are securities?

Some people save money by putting it in a jar or hiding it under the mattress. However most people invest their money so that it grows while it is being saved. For example, they open a bank account, join a superannuation plan or other investment scheme, pay into a managed fund, or buy bonds or shares.

Investments like these are ‘securities’. Securities are bought and sold in the ‘securities markets’. Banks, finance houses, the stock market, insurance companies, financial advisers and funds managers are all part of the securities markets.

Investing and risk

Investing money always has some risk. Sometimes an investment may not pay the investor as much as they hoped, or the investor may even lose the money they invested.

The trick is to ‘invest wisely’. That means finding investments that suit your needs and match the level of risk you are prepared to take. A person with a lot of money, who is prepared to lose some of it, may choose a very high risk investment which promises high returns. If the investment fails, the person can afford to take the loss.
On the other hand, a person with small savings is wise to choose an investment that may not pay so much, but has a lower risk and where it is unlikely that they will lose all their money.
The golden rule is: the higher the returns, the greater the risk of losing your money.

Watching the securities markets

Although investing always involves some risk, it is important that people’s savings are protected by law to some degree. We have laws about the way securities can be offered for sale to people, and how the investments are managed.
The body that keeps a watching eye on the securities markets in New Zealand is the Securities Commission.

Securities law in New Zealand applies to:

• the people who give advice about investing
• the information a person must be given before they invest money (an investment statement and prospectus)
• the way investors’ money is managed
• the information investors are given at regular intervals about their investment
• the behaviour of people in the stock market.

The Securities Commission has powers to enforce securities law. For example, it can:

• ban misleading advertisements for securities
• take action against illegal offers of investments
• summons people to explain if they appear to have broken securities law
• inquire into breaches of the law and publish its findings
• take people to court for illegal trading in shares on the stock market.

People on the Securities Commission

The Commission has up to 10 members appointed by the Governor-General on the recommendation of the Minister of Commerce. They are chosen for their experience and qualifications in business, law, accounting, public administration or the securities markets.

Making New Zealand a better place

The Securities Commission helps make sure that the securities markets are honest and open and a good place to do business. When this is so investors are keen to put their money into New Zealand’s securities markets. This in turn, provides money for industries and businesses to develop and to create wealth that benefits our country and its people.

Find out more!

Securities Commission
Level 12, Reserve Bank Building
2 The Terrace
Wellington
Phone (04) 472 9830
Fax (04) 472 8076
Email:

Jane Diplock, Chair of the Securities Commission, which helps to make sure that the securities markets are honest and open, and a good place to do business.