New rules for financial advisors

unit trust advisors on publicly-listed companies. SECZ said the requirement was taken to protect investors’ interests against being shortchanged by advisors.
“The SECZ and the Zimbabwe Stock Exchange wish to advise all persons offering investment advisory services to immediately register with SECZ.
“With effect from the date of publication of this notice in the local newspapers the ZSE shall not accept corporate actions filed by investment advisors that are not registered,” said the announcement.

An investment advisor is anyone making investment recommendations or conducts securities analyses for a fee, through direct management of client assets or written publications.
Investment advisors are prohibited from disseminating advice known to be deceitful or fraudulent, and from acting as a principal on their own account by buying and selling securities between themselves and a client, without prior written consent.

Following the announcement of the requirement, it will, with immediate effect, be illegal to render investment advice without a valid licence issued by the investments regulatory authority.
In an interview, SECZ chief executive Mr Tafadzwa Chinhamo said there was need to tighten regulations on investment issues where unsuspecting investors put out their money.
“We want to make sure that all is done properly. We want to make sure that investors are not misled. Our interest is to protect the investor. The public should be well informed.”

Mr Chinhamo said financial statements prepared by investment advisors should “be articulate” and carry the correct information.
“We just do not want anyone to advise on issues where people put their money. If they are not qualified, how good is the advice? We also intend to ensure that the people who do the statements are the proper people, and that they are qualified.”

Mr Chinhamo said the SECZ wanted to avoid a situation where firms went bankrupt soon after floating initial public offerings, prejudicing investors who would have been fed with wrong information.
“Companies may fail because they have been run badly, but advisors should be able to advise correctly on (the state of) the balance sheet. Our focus is on the investing public,” he said.

Mr Chinhamo said although the ZSE had its own way of keeping an eye on the advisors, the regulator needed to have records to be able to take remedial action where the law was flouted.