New Zealand’s Financial Markets Authority (FMA) says it will give priority to situations where large numbers of investors are at risk of loss, where there is evidence of intentional unlawful behaviour and where it needs to send a clear signal to the markets.

The FMA last week released its enforcement policy, which Chairman Simon Allen says gives the market a clearer understanding of the agency’s role, functions and priorities.

The FMA began operations in May, and Mr Allen says it will aim for open scrutiny of its activities.

“Promoting and facilitating the development of open, efficient and transparent markets is the FMA’s main objective,” he said.

“By publicising our enforcement policy we are deliberately seeking visibility and hope to assist participants in meeting their compliance obligations.”

He says the FMA plans to publicise enforcement actions, because open scrutiny will serve as a “powerful and educative deterrent”.

Shortly after launching the policy the regulator announced criminal charges relating to a finance company collapse.

Four important principles underpin the enforcement policy:

• The FMA will use the full regulatory toolbox, including bringing criminal prosecutions for serious misconduct, and holding directors, senior executives and advisers accountable where necessary. It may require financial compensation for losses resulting from unlawful conduct.

• Priority will be given to cases where large numbers of investors are at risk of significant or potential loss, where there is evidence of intentional unlawful behaviour, and where there is a need to send a clear regulatory signal to the markets.

• All financial market participants need to have clear and well-understood responsibilities.

• Where necessary, the FMA will bring test cases to clarify “grey areas” of the law.