Government looking at wholesale investor loophole
The government has finally agreed to start looking at closing the wholesale investment loophole.
Friday, July 17th 2026, 10:37AM
Commerce Minister Cameron Brewer. Photo / Supplied
Commerce Minister Cameron Brewer earlier this release launched a new phase of capital markets reform which looks at the contorverial wholesale investor loophole along with product disclosure statement regime.
The wholesale investor setting has been controversial for some time as companies used this mechanism to raise capital from unsavvy investors.
This has been particularly so with property companies offering potentially high risk investments with high forecast returns. The most high profile case recently was with companies associatied with Du Val (which were put in statutory management in 2024 owing an estimated $268 million).
The Financial Markets Authority (FMA) has for years been worried about about the wholesale investor regime and even went to court seeking clarification on how it operated.
New Zealand is an outlier in how its wholesale investor mechanism worked with the Ministry of Business, Innovation and Employment (MBIE) labelling it "unique" and "relatively permissive" by international standards.
A regular person can be deemed an “eligible” wholesale investor if they declare they have the requisite expertise and experience, and a lawyer, accountant or financial adviser validates this.
MBIE said there was "some evidence" inexperienced investors were accessing wholesale offers.
It also noted that companies were using mainstream and digital channels to promote wholesale offers which were also capturing a retail audience.
MBIE is seeking feedback on a number of proposals including:
- Restricting wholesale investment advertising
- Developing a more objective test around who qualifies as a wholesale investor
- Putting a cap on how much can be invested.
Submissions on the proposals close on August 25.
| « How not to become the Kākāpō of Financial Advice |
Special Offers
Comments from our readers
No comments yet
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
