Hoggard plaintiffs win round one

Kerry Hoggard

The High Court has ordered the Securities Commission and sharebroker JB Were to hand over documents and tapes relating to the Kerry Hoggard insider trading case.

In a hearing described by Justice Bruce Robertson as "hard fought," lawyers for the commission and JB Were argued they should not have to supply the plaintiffs with material relating to December 1999 trading in Fletcher Challenge shares by Mr Hoggard, who was the company's chairman at that time.

Business Roundtable executive director Roger Kerr and Catharine Franks, wife of Act MP Stephen Franks, are seeking a judgment that the trading was insider trading and illegal.

In his statement of defence Mr Hoggard admits his position at Fletcher Challenge at that time and that he issued instructions to buy shares on December 15, 1999.

But he denies the allegations of insider trading.

In the words of the judgment he "denies there was anything in his actions [that was] intended to subvert the operation of the securities legislation."

Justice Robertson rejected the commission's argument that section 28(4) of the Securities Act protected it from discovery. The section says commission members and staff cannot be compelled to give evidence in court.

The court found that did not encompass discovery orders.

The commission also claimed immunity for its documents generally on the grounds market participants would be less likely to co-operate with its inquiries if they knew the information they provided could be produced in open court. That would damage the public interest.

The court rejected that argument also, saying the commission was subject to the Official Information Act, which made specific provision for the problems the commission highlighted. There was no justification for creating a new class privilege for information the commission held.

In any case, Justice Robertson said, section 19 of the Securities Act made it clear confidentiality ceased after the commission published its report.

He made short work of JB Were's submissions.

"On a sensible balancing of competing interests, the commercial convenience and confidence between sharebroker and client is of much lesser importance than the integrity and enforcement of the statutory regime for curbing insider trading."

Mr Hoggard's lawyer, Rudd Watts & Stone partner Allan Boyle, did not participate in the hearing.

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