Quote from: ninjarobot on July 11, 2012, 07:18:36 PM

Quote from: zhoutong on June 12, 2012, 12:37:15 PM

Quote from: ninjarobot on June 12, 2012, 11:14:51 AM

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Membership in a DRS is mandatory for FSPs who provide a service to retail clients, because it provides consumers with an avenue for redress when a dispute arises with their financial service provider. Membership in a scheme is a pre-requisite for registration as an FSP.

Why did Bitcoinica LP not sign up with a Dispute Resolution Scheme?

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FSPs who are unsure as to whether they need to join a dispute resolution scheme should seek legal advice.

Did Bitcoinica seek legal advice in this matter, if so what was the outcome?

I haven't done much research, but to my best knowledge, DRS only applies to NZ residents.

Over 99% of Bitcoinica customers are not NZ residents so they are not classified as "retail clients". I believe that the company had plans to amend the Terms of Service to mention the illegibility of NZ non-accredited/non-institutional investors for Bitcoinica service.

FYI: Today I got a reply from FSPR Compliance regarding my question whether the mandatory Dispute Resolution Scheme for FSPs applies to non-NZ retail clients (most of Bitcoinica customers):

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From: FSPR Compliance compliance@fspr.govt.nz

Dear Sir

I refer to your query below.

All financial service providers must be a member of a dispute resolution scheme in respect of a financial service provided to a retail client. A retail client is defined in section 49 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 as any person who is not a wholesale client. There is no requirement that retail clients be New Zealand customers.

There is no offence provision where a FSP is not a member of a dispute resolution scheme. The Registrar will inform the Financial Markets Authority of your complaint.

So there you have it. Bitcoinica does not meet the requirements for financial service providers in NZ and also seems to be in violation of it's own ToS by not offering this service as an option to their customers:[/b]

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[21] Governing Law; Arbitration and Court Jurisdiction

Binding Arbitration: For any Claim (excluding Claims for injunctive or other equitable relief) where the total amount of the award sought is less than $10,000, you or Bitcoinica may elect to resolve the dispute through binding arbitration conducted in person, on-line or based solely upon written submissions where no in-person appearance is required. In such cases, the arbitration shall be administered in accordance with New Zealand law or any other established Alternative Dispute Resolution provider mutually agreed upon by the parties. Any judgment on the award rendered by the arbitrator may be entered, exclusively, in any court located within New Zealand. Exclusive Court Jurisdiction: Alternatively, you agree to submit to the personal and exclusive jurisdiction of the courts located within New Zealand to settle any dispute, which may arise in relation thereto.