Leading investment firm Jarden Securities is the latest to be caught in a crackdown on rule-breaking by the Financial Markets Authority.
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The company has been censured by the authority for mixing up investor money from derivatives trading with its own - known as co-mingling.
The rule breaches were committed by the niche investment company OM Financial, which First NZ Capital, since renamed Jardens, bought in 2019. OMF was integrated into Jardens broader operations earlier this year.
FMA director of supervision James Greig said keeping funds separate was a fundamental obligation for derivatives issuers, and any breaches were serious.
"We have little tolerance for firms not meeting their obligations in this area."
"Although no OMF clients lost money as a result of this issue, we considered that investor money was at risk while the necessary separation processes were not in place. The breaches warranted a public censure due to the significant period over which they occurred, as well as the value and number of transactions," Greig said.
OMF transferred about $US1 million of its own money into a trust account, which held investor funds in case of a shortfall in settling deals.
Greig said the money deposited by OMF was made for business-related payments to third party providers, not to safeguard against the risk of a shortfall arising.
OMF reported the breaches itself, which took place over a five year period, and changes have been made to ensure it does not happen again.
Earlier this week, the FMA censured small derivatives trader Firma Foreign Exchange Corporation for not holding minimum levels of assets and not checking if their customers knew what they were investing in.
The authority has also tightened up on how financial services firms advertise to ensure they do not mislead or deceive investors.
