The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - has cancelled Stockfox Limited's (Stockfox) Financial Advice Provider (FAP) licence with effect from 30 May 2024.
The FMA is satisfied that Stockfox no longer meets key requirements for a market services licence under the Financial Markets Conduct Act (FMC Act) because:
- David McEwen, as Stockfox's sole director and its only financial adviser, is not a fit and proper person [1]
- Stockfox is not capable of effectively performing a financial service [2]
- Stockfox is likely to breach its market services licensee obligations [3]
The FMA issued Mr McEwen, and entities associated with him (Associates), a permanent stop order in December 2023. The FMA issued the stop order because it was satisfied McEwen and Associates had distributed communications that were false or misleading, contained material misdescription or error, and/or did not comply with the FMC Act because they made unsubstantiated claims as to the value of McEwen and Associates financial products offered to investors. The financial products in question included Convertible Note Agreements, shares and Options to Acquire Units in Limited Partnership Agreements.
The stop order prohibits McEwen and Associates from making offers, issues or sales or other disposals of McEwen and Associates' financial products or accepting contributions, investments, or deposits in respect of those products.
Mr McEwen advised the FMA that he is unable to conduct regular business activities and has not responded to FMA requests directed to entities within his control for documents and information. Mr McEwen failed to respond to the FMA's proposal to cancel Stockfox's licence and failed to respond in substance to the FMA's proposal to issue the permanent stop order.
The FMA is satisfied Stockfox is likely to breach its market services licensee obligations and has determined there has been a material change in circumstances in relation to Stockfox's licence [4].
FMA Director of Specialist Supervision and Response, Peter Taylor, said: "Mr McEwen has failed to meet the standards and obligations expected of a licensed Financial Advice Provider. His conduct has potentially caused harm to his clients and breached their trust. Such conduct erodes the public's confidence in the financial advice industry.
"The FMA considers it is necessary to cancel Stockfox's licence to promote confident and informed participation in the financial markets, facilitate the development of fair, efficient, and transparent markets, ensure appropriate governance arrangements apply to financial products and services, and to protect investors."
Mr McEwen had 20 working days' notice before the cancellation came into effect so he could notify his clients and assist them in making arrangements to transfer their business to another FAP, as well as to allow for an orderly disposal or wind-down of the Stockfox financial advice business.
Mr McEwen, who is the sole director and controlling owner of Stockfox, advised the FMA that he has left New Zealand and has no plans to return.
The FMA has an ongoing investigation into Mr McEwen and Associates and is therefore unable to comment further.
