20-30 years ago when a stockbroker, company or financial product provider didn't like what we had written, we used to receive a simple phone call or letter threatening million dollar legal action if we didn't immediately comply with their demands. We never did.

So the companies offering dubious financial products and services have finally adapted. As this newsletter has often noted, companies are the most successful entities as they constantly adapt to the changing technological, political, legal, economic and social environments. In a more regulated legal environment that protects the interests of Financial Services Providers, a stockbroker recently attempted to use the Financial Markets Authority to silence our voice and close our business.

But Securities Research Company has adapted too. Seven years ago we migrated our business (and investment wealth) to a legal environment that further protects us from nuisance legal threats and free of a "Big Brother" regulatory environment that claims to "Protect the interests of retail investors", but appears more interested in protecting the interests of NZX Ltd, stockbrokers and fund managers.

As we notified readers in July, on 10 June 2013 we received a 7-page letter from NZ's rogue securities regulator, the Financial Markets Authority, which can be summarised in three sentences: "FMA is concerned that you may be providing a financial adviser service in contravention of the FA Act and FSP Act. You must stop providing these services immediately. A company is liable on summary conviction to a fine not exceeding $300,000".

The FMA had received a complaint. No, not from a "retail investor". A stockbroker underwriting the Mighty River Power float complained about our "Don't Buy Mighty River Power" email!

We exchanged emails with the FMA, providing requested information about our business and explaining our legal arguments why we believed our business does not need to register with the FMA in New Zealand.

The first step in registration, for example, is a statutory declaration that "I live and work in NZ". We don't. In 2006 we moved offshore and run the business through a British Virgin Island registered company.

It is not our place to interfere in the internal politics of a "foreign" country, but perhaps NZ residents should be concerned when their securities regulator repeatedly asks a company to make a false statutory declaration when registering as a Financial Services Provider?

Discussions with the FMA made little progress, with the FMA repeating its original position and failing to consider, discuss or even acknowledge our legal argument for non-registration. So in our third communication on 7 August we sought to end this pointless discussion with a non-legal approach. Your Editor wrote: "I do not believe that any government - whether in New Zealand or North Korea - has the right to control foreign residents and foreign companies operating outside their territorial borders, regardless of what politicians may choose to write into their domestic laws. Legal opinions and my position are, of course, irrelevant as, in practice, governments can impose control anywhere - and only where - they can enforce their rules. I do not believe I am required to register in New Zealand and therefore do not intend to do so".

That silenced the FMA . . . for 5-6 weeks when they sought to "outlaw" our business by publishing a "warning" about Securities Research Company on the FMA website. This page is mainly just a list of foreign companies "not registered as a financial service provider in NZ". The companies committing fraud against NZ investors are more likely to be found on the other list - the Financial Services Providers Register (e.g. that is where Ross Asset Management was listed until investors reported difficulty withdrawing money and the FMA quickly de-registered them - once again "closing the stable door after the horse had bolted").

Of course, anyone is free to publish "warning" pages on the internet. Securities Research Company may soon have one for rogue securities regulators.

Readers may be interested to learn that the FMA's self published Investigations and Enforcement Report 2013 writes about "offshore entities that do not have a place of business in New Zealand" where the FMA "currently has no direct jurisdiction". In their dealings with us the FMA states it has jurisdiction. In their own report excusing their inability to act against offshore entities they say they lack jurisdiction. So which is it?

Finally - 130 days after their first letter - the FMA sent an email restating, yet again, their position that "Securities Research is required to be registered and authorised as a financial adviser". If they really believe that legal position, does the FMA not have a statutory obligation to enforce the law? Will armed FMA special forces agents be mounting an attack on our "walled compound" in North Borneo? No, the FMA has decided "that we will take no action".

Three decades ago our advertisements stated that "Securities Research is a fiercely independent stock market research organisation". We meant that then and we mean it now. We seek to offer a truly independent stockmarket advisory service - owned, researched and written by an investor for investors!