By Nick Stride
Friday 15th March 2002 |
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Kerry Hoggard |
Business Roundtable executive director Roger Kerr and Catharine Franks, the wife of Act New Zealand MP Stephen Franks, will donate the $500,000 Mr Hoggard has agreed to pay to a trust available to plaintiffs in any future insider-trading cases.
"Our position was that we would only settle if the settlement was of real substance," Mr Kerr said.
Tim Williams, a partner in law firm Chapman Tripp, said the settlement was a successful outcome for the claimants because the maximum a court could have awarded would have been $635,000.
In insider trading cases the maximum penalty is the higher of the value of the trade or three times the gain made or loss avoided.
Mr Hoggard, when he was chairman of Fletcher Challenge in December 1999, bought $635,000 worth of shares in FCL's letter stocks days before the company announced it was to dismantle the letter-stock structure.
He has denied wrongdoing, insisting his trading was a "technical breach" of the Securities Act.
The Securities Commission, however, said in a report that he had broken the law. The High Court ruled Mr Kerr and Ms Franks could undertake a damages action against him, to be paid for by FCL.
Mr Kerr and Mr Franks have maintained they took the action to demonstrate the unsoundness of New Zealand's insider-trading regulations.
Mr Kerr said this week that the case had also demonstrated that it was neither expensive nor complicated for shareholders to use the law to oblige companies to take action against those accused of insider trading in the company's securities.
"We got leave from the court to take action but that didn't cost much. Then the company paid."
Fletcher Challenge will receive around $100,000 of the settlement in compensation for its costs.
The government is putting together a beefed-up insider-trading regime. Under consideration, among other things, are powers for the Securities Commission to take action in its own right.
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