Commission fells forestry investments
The Securities Commission says some promoters of forestry investments are misleading the public.
Wednesday, May 30th 2001, 12:21AM
Forestry investments disappeared from sight after the Asian crisis several years ago, but they are now back on the scene and they have once again caught the eye of the Securities Commission.
The commission yesterday warned promoters of forestry investment schemes about the quality of their offer documents and some of the material put onto websites.
Some of the advertising and offer documents do not comply with the law and "are likely to mislead investors," the commission says.
Yesterday's warning isn't the first from the commission to promoters of forestry investments. Similar warnings have been issued over the years, and in 1997 the commission threatened to ban some offers. (See earlier story here).
The latest warning follows similar warnings to the promoters of syndicated property.
The commission says that some forestry promoters quote an "equivalent bank interest rate" prominently in their advertisements and represent it as the expected rate of return on forestry investments.
"This gives the impression that returns from forestry investments are equivalent to returns on bank deposits. This is not so," the commission says.
"This is likely to mislead investors. The rate of return from a forestry investment differs from a bank interest rate in risk profile, timing of returns and the nature of returns."
In a letter sent to 15 promoters of forestry schemes, commission chief executive John Farrell, goes as far as saying that the use of equivalent bank interest rates is misleading.
The commission has also taken the opportunity to also warn promoters about what they can do on the Internet.
It its letter to the 15 promoters of forestry schemes the commission advises them of the consequences if they do not comply with the law. These include banning advertisements and offer documents, including the content of web sites that do not comply.
It may also consider inviting the Registrar of Companies to consider prosecution.
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