The New Zealand Financial Markets Authority (FMA) has filed a civil lawsuit against Booster Investment Management Limited (BIML), a wholly-owned subsidiary of Booster Financial Services Limited.

The lawsuit alleges that BIML and its following directors and senior managers violated the Financial Markets Conduct Act (FMCA): directors Allan Yeo, Paul Foley, former director Brendon Doyle, and senior managers David Beattie and Nicholas Craven.

The FMA claims that between 2017 and 2022, BIML breached multiple regulations through its investment in the related party limited partnership, Booster Tahi Limited Partnership (Tahi). Tahi further invested in a series of domestic wine enterprises, which merged to form Booster Wine Group (BWG).

The investors involved in this case are retail investors, with funds coming from three Booster schemes (Booster KiwiSaver Scheme, Booster Super Scheme, and Booster Investment Scheme).

As of May 31, 2024, 24 out of the 61 retail funds managed by Booster had exposure to BWG, including six KiwiSaver funds, with exposure percentages ranging from 0.77% to 3.83%.

The FMA has raised 75 causes of action, alleging that:

- BIML, as a manager, failed to fulfill its duties and obligations when making the investments mentioned above;
- The involved individuals improperly used their positions as directors or senior managers to invest scheme funds in ways that benefited Tahi and BWG, amid conflicts of interest and improper management of related party interests;
- BIML did not follow required processes, leading to related party transactions that violated prohibition regulations.

The FMA alleges that the related Tahi investments were made without any consideration by BIML's investment committee:

- Under specific investment circumstances, these were not in the best interests of scheme participants, including concerns from BWG lenders (which BIML was aware of), the purpose of advance payments, and BWG's poor performance;
- Specific investments did not adhere to Tahi's investment standards (which BIML was obligated to monitor);
- The scale and timing of specific funding requests and the response timeframe, as well as the failure to reassess the appropriateness of continuing investments when significant changes occurred in the underlying business or its broader circumstances.

The FMA seeks a declaration of breaches, penalties payable to the state, and damages for investigation.

The FMA's regulatory team has increased its engagement with BIML to ensure satisfaction with BIML's governance and operations, with a particular focus on its direct investment activities. Booster is cooperating with the FMA's supervisory team. This work will proceed concurrently with the lawsuit, emphasizing current and future compliance and investor outcomes.