Pacific Edge gets FMA warning over disclosure, must compensate shareholders

Monday 25th May 2015

Pacific Edge, which commercialised a non-invasive test for bladder cancer, has agreed to make a $500,000 compensation payment to shareholders after an investigation by the Financial Markets Authority found that the company probably breached NZX listing rules on continuous disclosure.

The regulator issued a public warning to Pacific Edge after investigating delays in disclosing new contracts in 2013. The compensation payment will go to shareholders who sold the stock in the window between the company signing the contracts and making an announcement to the NZX, the FMA said in a statement.

Pacific Edge shares soared as much as 250 percent in little more than a week following the company's October 2013 announcements that it had signed agreements with US national healthcare providers FedMed, American's Choice Provider Network and Stratose, making its Cxbladder test available to 40 million Americans. In acknowledging the historical breaches, the company said today that it had been contractually bound to get approval from its counterparties before making such an announcement which "led to a delay between signing of the agreements and the announcements to the NZX."

The stock reached as high as $1.637 on Oct. 23, 2013 and reached $1.76 in February 2014, only to give up much of its gains. It last traded at 73 cents.

The FMA said Pacific Edge can offer shareholders shares instead of cash as compensation. The compensation covers investors who sold the shares from 10am on Oct. 11 through until 10am on Oct. 18 that year, the FMA said. As a result of the investigation, the company has undertaken a compliance audit and has implemented the compliance recommendations, the regulator said.

"In determining the outcome, we took into account the specific factors of this case, including the nature of the conduct, Pacific Edge's offer of compensation to investors, and willingness to undertake the compliance audit," said Belinda Moffat, the FMA's director of enforcement and investigations.

BusinessDesk.co.nz

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