FMA play down success of low-ball Whimp strike

Sean Hughes, head of the Financial Markets Authority. Photo / Mark Mitchell

First-day action by the Financial Markets Authority may have scared off some low-ball share offers but chief executive Sean Hughes says it is too early to talk of success.

The new authority on Monday told Bernard Whimp - who has made below-market-price offers to buy shares - that unsolicited offers would have to contain a copy of a warning in a prominent position.

Whimp was quoted yesterday as saying he was retiring from making offers.

The authority was aware Whimp had sought share registry details from at least 11 more companies, suggesting he was intending to make further offers.

"If at the end of the day Mr Whimp decides not to pursue making these offers that's entirely a matter for him," Hughes said.

"We wanted to use these powers, we're pleased the Government and Parliament have given us some new remedies to pursue and we know, obviously, about Mr Whimp's offers and it was important to us to be seen to be acting from day one.

"If as a result of our warning [on Monday] investors have saved money and have not lost what they otherwise might have lost had they accepted those offers, we're pleased with that outcome but it's too early to call it a success."

Making an offer for an asset below market price was not illegal per se, Hughes said.

"What we're trying to do ... is ensure that anybody approached with such an offer as Mr Whimp has done is fully aware of their options," he said.

"[They] know that they can sell their share on market for the market price, which traditionally has been considerably higher than what Mr Whimp is offering and that they will, if they proceed through a broker, receive payment within three days not on deferred payment terms after up to 10 years as Mr Whimp is offering."

Whimp had until Friday to make a submission on the matter.

"In any event we'll look forward to seeing him in court on Monday, we've got an existing action running against him," Hughes said.

That action was started by the Securities Commission last month. It intended to seek orders on whether offers on deferred payment terms of up to 10 years was misleading.

The High Court at Wellington made some interim orders preventing Whimp from making the offers; a more substantive hearing is due on Monday.

The overall mission of the authority was to restore investor confidence in the market, Hughes said.

"If people are being preyed upon and are fearful of selling their shares because they don't understand the process and don't understand the price they should get, to us that's going to discourage people from coming into the market which just runs counter to everything we're trying to do."