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Legal action still possible in Fletcher Challenge insider case

By Phil Boeyen, ShareChat Business News Editor

Tuesday 28th November 2000

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Fletcher Challenge says it would consider taking legal action over alleged insider trading in the company's paper shares if it can get more information on the case.

Last week the Securities Commission made public its report into insider trading in Fletcher Paper shares in May last year, claiming an anonymous person known as EF used information regarding the merger of Fletcher Paper with Fletcher Challenge Canada to manipulate the market and make a profit.

Media reports later identified EF as Wilson Neil director Paul Hyslop. The Securities Commission report said 'EF' could not be prosecuted because he had received the information third or fourth hand

Fletcher Challenge chairman, Rod Deane, today reiterated his company's stance that better definitions and clearer statutes are needed to more effectively limit the potential for insider trading.

"The company is very concerned that such incidents can take place, but that the law under which companies and investors operate makes it difficult to test the behaviour in court."

"Fletcher Challenge committed considerable resources to investigating the incident at the time. It carried out exhaustive enquiries, including interviews with a majority of the individuals referred to anonymously in the Securities Commission's report."

Mr Deane says Fletcher Challenge does not have the further investigative evidence gathered by the Serious Fraud Office and the Securities Commission, and without that evidence, any attempt at prosecution is likely to be inconclusive.

"However, should we be able to access this information, we would certainly review this position."

Mr Deane says Fletcher Challenge is also willing to have input to any review of the relevant legislation to help protect shareholders from manipulation of the market on the basis of information not available to the general public.

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