Tougher insider trading laws announced

By Phil Boeyen, ShareChat Business News Editor

Wednesday 28th March 2001

The government has unveiled a number of moves to clamp down on insider trading, including forcing company directors to disclose any share dealings at the time they make them.

The plans follow a government-led investigation. launched last September, into how to improve New Zealand's insider trading regime.

Acting Commerce Minister, Trevor Mallard, says an effective regime plays an important part in determining how domestic and overseas investors see the New Zealand market.

He says the government plans to make several improvements to the current regime, including two measures aimed at prevention.

The first measure is a statutory continuous disclosure regime that requires companies to provide ongoing and timely disclosure of information that would have a material effect on the price of securities.

Although listed companies currently have to abide by NZSE rules regarding continuous disclosure there is no legal obligation, unlike in Australia where the ASX rule on continuous disclosure refers to Corporations Law.

The second measure will require directors to disclose their share dealings at the time they are made.

Mr Mallard says the two measures will act as a deterrent to improper trading on the market, counter the distortion of the market through rumours and enable investors to make informed investment decisions.

He says the government also intends to improve enforcement against insider trading.

"At present there is no public enforcement body to undertake prosecutions of insider trading in New Zealand - the only recourse is through costly and time consuming private legal action.

"To improve enforcement we intend establishing the Securities Commission as a public enforcement agency. This could act as a deterrent to insider trading activity and provide a body that would be able to take an action for the public benefit and not be dissuaded by the time or cost involved."

Mr Mallard says officials are working on the technical detail of all the proposals and are scheduled to report back by the middle of the year, with legislation enacted by the middle of 2002.

Meanwhile he says the government is also planning a broader review of insider trading law, including implementing market manipulation law and the possibility of introducing criminal penalties for insider trading and continuous disclosure.

Discussion paper on those issues will be released by the end of the year.

Comments from our readers

No comments yet