Ned Kelly no longer wears body armour and carries a rifle. His latest personification, Adelaide lawyer John William Armour, simply posts loads of letters to Kiwis every year offering to pay us a fraction of what our shares and bonds are worth.

While this is not illegal, it is unscrupulous. His success depends on taking advantage of widows, beneficiaries and others who lack financial knowledge: unworldly innocents who accept at face value his misleading official-looking offers for their shares and bonds.

Armour has at least two offers circulating in New Zealand at present. He stands to be well on his way to doubling his money in his offer for Tower shares; in the other he is offering 80 cents for Fletcher Building debentures which sell on the market at $1.10. An FBU bond holder who accepts immediately forgoes 8.25 per cent interest and won't get their original $1 investment repaid in three years. They'll get $80,000 from Armour, but around $109,500 through a broker (commission would be between $400 and $500).

In targeting fixed interest investors Armour is playing on the fact that many people do not know most fixed interest bonds are as easily traded as shares, and commission rates are lower.

Judging from the scale of his activities - in one mailout last year he was reported to have targeted investors in 23 different companies - Armour must make good money with a satisfactory strike rate. To make the exercise worthwhile he has to pay postage costs on letters to potentially thousands of people. Most will - and should - ignore them.

Worse, Armour - who trades under the name Stock & Share Trading Company PTY Ltd - has outmanoeuvred the Financial Markets Authority. A quick glance at the small print, carried in a wordy, separate page in his offer documents, carries the agreed statement he negotiated with the authority that permits him to continue operating. One recipient who phoned me thought this was an official endorsement of his offer, rather than a warning to take care.

Armour has been sending out similar low offers here for some years. He presumably knows that those most likely to accept his offer (a) can't be bothered reading small print, (b) simply see a large dollar amount easily obtained for their securities, (c) either don't have a financial adviser or want to save money by signing up with one, or (d) think it is a good deal as the offer says prominently they don't have pay any fees.

Instead of boldly saying: DO NOT ACCEPT THIS OFFER, or “TAKE CARE: this is an unsolicited offer”, the FMA statement is presented in a blah-blah, legalistic fashion.

One letter I saw last week offered $1 a share for Tower shares, when they were $1.76 on the market. They were $1.79 on Friday.

In a large box on the front page it says “Amount Payable to You: $14,164”. Had she dealt with a broker she would have got $25,353 - nearly double Armour's offer.

The FMA statement reads: “This document contains an offer from Stock and Share Trading PTY Limited to buy your shares in Tower Ltd. Before you accept you should carefully read the details of what you will be paid, and when, and any fine print anywhere on the offer or forms.

“Make sure you have read and understood the terms of the offer. The Financial Markets Authority recommends you talk to an authorised financial adviser and find out what your investment is really worth before selling it.” It finally gets to the point saying the offer is at $1 a share, and in the next paragraph says the then market price was $1.76. It suggests investors check newspapers for the latest price or and look for an adviser in the Yellow Pages.

The small print says that you must accept the offer by September 6 (not much time to find an adviser) and makes it clear that once you have signed the document it is irrevocable: you can't change your mind. After adverse publicity in the past - particularly surrounding Christchurch-based Bernard Whimp - some investors tried to back out of these deals. Whimp, who has since announced his retirement, made $300,000 alone from one offer for Vector shares.

After all the adverse publicity, I find it difficult to understand why the financially unsophisticated people accept these offers. But that doesn't mean they shouldn't be protected.

For starters the FMA needs to toughen up its requirements on Armour and others who make these offers.

The most obvious place to start is to make it much more difficult for them to get access to company registers, which provides them with shareholders' addresses and the size of their holdings. At present companies like Tower and Fletcher cannot refuse to hand them over even if they consider it is for an improper purpose. Offers should also be open for a reasonable time.

At a parliamentary select committee hearing last year, Chapman Tripp partner Roger Wallis expressed concern at the comparative ease with which third parties can gain access to registers “for improper purposes, with the most common use being unsolicited direct mail offers.

“Till the law is tightened the sharks will keep circling,” Wallis added.

He is on the ball.

- © Fairfax NZ News