A lawyer for local property firm Du Val Group has told the High Court its social media advertisements were not misleading.
(File image) Photo: 123RF
The company is challenging last year's order from the Financial Markets Authority (FMA) to pull the ads because they were likely to deceive investors.
When the FMA directed Du Val to take down its ads for its mortgage fund, it said the company made misleading claims about "zero fees" when in fact, it retained all profits above the 10 percent fixed return that was paid to investors.
It also said that while the company used the wholesale investor exclusion, which is designed for investors considered highly experienced and/or well-funded, Du Val appeared to be using social media to target less-experienced investors.
Du Val's lawyer, Davey Salmon QC, told the Auckland High Court this morning that similar claims about fees were made by banks all the time and wholesale investors understood that any business that took a deposit did so for profit.
"The suggestion that it's misleading to say 'no fees' where it is manifestly an evident part of the trading scheme of New Zealand that all deposit takers have a profit notice and that fees are understood to be the things taken out of their account that reduces their apparent interest earnt, that's not a meaning that the words are capable of having ... it's not a capable interpretation to say that's misleading."
He also said there was nothing misleading about targeted ads being seen by the wider public, which occurred all the time, such as an advertisement for farming products or a motor car that said it was the most efficient and powerful in its class.
"Some novice who's not interested in cars like me doesn't know what that means. I have no idea what the class is, I see the advertisements all the time. It could lead me to thinking that it's more efficient than it is, because it's in a class of very inefficient motor vehicles.
"But the people who actually turn up and buy these things are in a different sector than the novices who don't shop for cars."
At the time of reporting, the Financial Markets Authority was just beginning its submission.
