Pegasus Markets was earlier fined a total of $200,000 after being found guilty of two charges.
The FMA's counsel, James Cairney, told the court Reps' offending damages the reputation of New Zealand as a safe place to do business and was "considerable but unquantifiable".
He added Reps had a duty as a company director to ensure compliance but "was very much asleep in that role".
Pegasus Markets' only other director and sole shareholder is Rafael Ruiz Lemonche, whose residential address is in Barcelona, according to Companies Office records.
The firm's registered office, however, is on Dickens St in Napier.
Cairney also described Reps, who has been a director of more than 90 current or removed companies in New Zealand, as a "gun for hire". The FMA, he explained, was concerned about people in the market willing to take a fee and the risk to help such a company become registered.
Reps, who appeared at the hearing via video link from the Queenstown District Court, said he accepted the guilty verdicts for his two charges and "want[s] to pay back my debt to society".
The North American businessman, however, also argued his offending "didn't involve any financial loss, dishonesty or fraud on my part".
Judge Jelas sentenced Reps to two months of community detention and 90 hours' community work. She reserved her reasons for the sentence, which will be delivered in writing at a later date.
"I accept as a result of this prosecution your normal employment has come to an end," she said.
Reps' conviction means he cannot act as a director of a financial services firm for five years.
When informed he would need to travel from his home in the Southland town of Lumsden to Gore to complete his community work, Reps said: "I'd like to receive credit for the travel time if possible."
Judge Jelas quipped: "Doesn't work like that."
The FMA's head of enforcement, Karen Chang, said Reps' sentence sends a strong message of deterrence to those who abuse the FSPR by helping overseas companies attempting to fool prospective investors.
"This is an important ruling as it shows there are criminal consequences for local 'directors for hire' – people who try to profit off their New Zealand residency by becoming directors for offshore businesses with no real New Zealand presence. We continue to monitor the FSPR to ensure that those who are on it are there for proper reasons," she said in a statement.
In her sentencing decision for Pegasus Markets, Judge Jelas said New Zealand "cannot be a country where breaches of its financial markets regulatory systems can be an acceptable commercial consequence".
"I consider the aggravating factors of Pegasus' offending include the significant period of time over which the offending occurred ... The false and misleading representations on both of Pegasus' website continued to be available to the global financial market for a period of over two and a half years."
Pegasus Markets, which was incorporated in March 2014, was also warned by the Companies Office about the misleading statements but failed to remove them.
"I consider the fact that they remained in place was for the intended purpose of portraying to others that Pegasus was subject to regulation by New Zealand's financial regulators," Judge Jelas said.
"There is a high degree of culpability involved in the offending which was deliberate, blatant and over a lengthy period."
The prosecution of Pegasus Markets and Reps came after the FMA was granted powers in 2014 to direct the registrar of the FSPs registry at the Companies Office to deregister providers.
During the same year, the FMA also began a review of companies on the registry and found some FSPs deliberately promoted a New Zealand registration to give an impression their activities were regulated.
Chang said the FMA has deregistered dozens of companies from the FSPR.
"There are some people and businesses who go to great lengths to take advantage of New Zealand's good reputation," she said.
Other similar FMA prosecutions include Morgan DeVere Corporate Finance Ltd, which was fined $40,000 by the Wellington District Court in 2019.
Morgan DeVere's NZ-based director, former Wellington real estate agent Rene Moorby, also pleaded guilty and was sentenced to 75 hours of community service.
In a separate case, South Island businessman Garry James Patterson was prosecuted and sentenced to 200 hours' community work and three months' community detention in 2018.
