The Disclosure Gap
A forensic analysis of the Senior Trust Capital investigation reveals a critical failure in financial oversight, exposing directors to significant personal liability.
The Context
On 14 May 2025, Senior Trust Capital Limited (STC) withdrew its public share offer. The Financial Markets Authority (FMA) had opened an investigation in November 2024. The core allegation: non-compliance with Parts 2 and 3 of the Financial Markets Conduct Act 2013. The FMA’s focus is the product disclosure statement (PDS) and advertising material. The investigation is ongoing. A separate case involving ANZ and ING resulted in a $45 million return to investors. This figure, while not directly linked to STC, establishes a precedent for regulator-imposed financial restitution. The audit trail for STC is incomplete; no final penalty or court ruling is documented.
The Risk
The risk is quantifiable and personal. Directors may be personally liable if a court finds a breach of duty under the Companies Act 1993. The duty to act in good faith and in the best interests of the company is paramount. A failure in disclosure governance can be construed as a failure of this duty. The FMA’s power to require corrective communications, as it did with STC on 27 June 2025, is a precursor to more severe action. The $45 million precedent from the ANZ/ING matter provides a numerical benchmark for potential financial exposure. This is not an operational cost; it is a direct erosion of capital and reputation. The governance gap here is mathematical: the difference between compliant and non-compliant disclosure represents a multi-million dollar liability variable.
The Control
The control is a forensic-grade review of all public-facing financial disclosures. Treat every PDS and piece of marketing material as a auditable financial document. Implement a pre-publication verification protocol that maps each claim directly to the requirements of the Financial Markets Conduct Act 2013. This is a technical exercise in compliance accounting.
The Challenge
These are the critical questions you should be raising at the board table:
| Where is the documented, line-by-line audit trail proving our last three PDS documents complied fully with Parts 2 and 3 of the FMCA 2013? | |
| What is the quantified financial exposure, modelled on the $45 million precedent, if our disclosure is found materially deficient? | |
| Precisely which individual or committee holds the final sign-off authority for financial promotions, and what is their documented technical competency in FMCA compliance? |