Both the MBIE and the FMA have declined further comment on the issue since news of the investigation broke on Friday. Stobo also declined the Herald’s request for comment.
Commerce Minister Scott Simpson said he asked the MBIE to undertake an independent investigation into the matters raised.
“Concerns were raised with me and they were sufficient to warrant further investigation,” Simpson said.
As well as his FMA chairmanship, Stobo has also stepped aside from his other Crown governance and advisory responsibilities.
They include being chair of the Local Government Funding Agency and director of Auckland Council’s Future Fund. He is also a director and shareholder of several private companies and chairs the Cancer Society Auckland Northland’s finance, risk and audit committee.
Stobo is understood to have been more “hands-on” and involved in the FMA operations than is usual for a chair.
The investigation comes as the FMA faces scrutiny for its handling of the high-profile Du Val insolvency case and the fact that it has still yet to lay any charges relating to its raid on the property firm’s founders, Keynon and Charlotte Clarke, in August 2024.
The Clarkes were put under asset-freeze and travel-ban orders last year amid ongoing FMA inquiries into the Du Val group, with around 70 related companies in receivership and statutory management.
Since then, the Clarkes have been vocal in criticising the regulator, saying its actions have cost investors their money. The market is eagerly awaiting the FMA’s next move.
Meanwhile, the Stobo investigation comes as trust in institutions such as the police and courts has been shaken by scandals and court secrecy.
The Jevon McSkimming affair – involving misconduct at the highest level – has severely damaged trust in the police, while controversial name suppression cases have become a flashpoint for criticism of the judiciary.
The FMA was created as an improved version of the previous Securities Commission, which many people considered as having failed to enforce rules around full disclosure in the lead-up to the finance company implosion that preceded the Global Financial Crisis.
The last thing the FMA needs now is a scandal at the top of its own pyramid.
The FMA, which employs about 340 staff, has recently had to cut its cloth amid a budget blowout at the back end of 2024.
It was allocated around $78 million in this year’s Budget, up from $71.3m in the previous year. Just over $3.4m of the increase was to support its “expanding legislative remit”, with a further $3.3m for investigative and enforcement functions.
Despite the extra funding, the regulator recently cut about 25 permanent jobs during a restructure, following cost blowouts in the second half of calendar-year 2024.
The FMA’s core purpose is to ensure the financial markets are fair, efficient and transparent. The cloud now hanging over the current chair is a bad look at a bad time for the regulator.
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