1 May 2002
The Securities Commission warns people about committing money to the Direct Buy investment scheme. The scheme is part of
arrangements for buying and selling residential property.
The Commission has banned advertisements relating to the Direct Buy investment scheme.
Direct Buy is run by an Auckland company, Prometheus Management Limited. Dr Frederick Stewart is a director of the
company. The scheme targets both potential sellers and potential buyers of property but appears to be designed to
benefit buyers.
It claims to offer an investment scheme which will substantially reduce the costs for a buyer borrowing money by way of
mortgage. It appears that the vendor commits part of the proceeds of sale to an entity called The DeBeez Foundation
Trust. It is said that this will “complete the purchase unconditionally of the investment package which the vendors have
sold” as part of the real estate transaction.
The investment package appears to involve investment in projects in Australia operated by Barkworth Olives Management
Limited and Queensland Paulownia Forests Limited. Both companies manage registered investment schemes in Australia. Each
has informed the Commission that their involvement in the Direct Buy investment scheme is without their knowledge or
authorisation.
In the Commission’s opinion the Direct Buy investment scheme is subject to securities law and should have a registered
prospectus and an investment statement. These are not available.
The Commission also believes the Direct Buy advertisements are likely to deceive, mislead or confuse investors. They
give the impression that the scheme is endorsed by the Australian Securities and Investments Commission and/or the New
Zealand Securities Commission. They also give the impression that the returns on the investment are promised or
guaranteed.
Ends