New Zealand's Commerce Commission has slammed leading brokerage Forsyth Barr and Credit Agricole's Calyon over the way they sold toxic bonds to retail investors in 2006.The Commission described their behaviour as "deceptive and misleading" in its 32-page final report into the collapse of Credit SaILS notes in 2008 and 2009 that cost 3,000 retail investors NZ$70.7 million in losses from the NZ$91.5 million they invested.Forsyth Barr promoted the notes as "capital protected index-tracking" notes offering interest of 8.5 per cent and an average return of 10 per cent. The notes were created by Calyon out of a Cayman Islands-registered company and based on asset-backed securities registered on the Irish stock exchange.They were based on derivatives connected to a basket of leveraged instruments exposed to three Icelandic banks, Lehman Brothers and Washington Mutual. The capital value of the notes evaporated when these banks went bankrupt in late 2008.Investors complained to the Commerce Commission in 2010 that Forsyth Barr had promoted the notes as low risk, conservative investments that were safer than "a term deposit at Westpac".The Commission detailed a series of emails from Forsyth Barr executives showing how they tried to keep the "sizzle" in their marketing material and downplay the risks.Both Calyon and Companies Office tried to convince Forsyth Barr to tone down the promises of capital protection in the prospectus and marketing material, but Forsyth Barr objected. "One of the deletions we feel is harmful to the marketing of this offer. Remember we catch more flies with honey than vinegar!" Forsyth Barr was quoted as saying in an email.Elsewhere, the brokerage firm protested at having to tone down the 8.5 per cent returns included in the prospectus."Why can't we put the 8.5% in there with a tiny (1) next to it and then at the bottom in tiny text next to the (1) we put all their dumb language? This would be workable. We're not selling bloody cigarettes!" a Forsyth Barr executive was quoted as saying.Other banks and brokers had refused to market the complex derivative-based products to their retail investors, the Commission said.The Commission started the investigation in 2011 and eventually settled with Calyon and Forsyth Barr, who paid NZ$60 million into a compensation fund but admitted no liability. The Commission said it believed it had to settle to ensure many of the elderly investors exposed would receive some funds, given legal action could have dragged on for two to three years.