Stockbroker charged over Rubicon raid

By Nick Stride

Friday 12th July 2002

The New Zealand Stock Exchange is preparing charges against sharebroker JB Were relating to its conduct in organising Guinness Peat Group's overnight purchase last week of an 18% stake in Rubicon.

The exchange said the charges, once approved by its board, would be laid before an exchange disciplinary committee.

The committee would decide what sanction, if any, would be imposed on the broker.

The options are censure, a fine of up to $1 million and expulsion or suspension of exchange membership.

The exchange's action resulted from complaints from other broking firms that JB Were had breached exchange members' regulation 6.17 by making its offer to only a handful of institutional Rubicon holders.

The regulation says: "Any member or member firm who receives an instruction to acquire more than 10% of the issued capital of a listed issuer ... shall bid in the market to purchase from other member firms at least 20% of the total number of each class of securities sought."

JB Were says it conducted the purchase in accordance with legal advice, which was consistent with the advice it had received on other occasions from different legal advisors.

It said there was uncertainty among brokers about what the regulations required of member firms and that they needed clarification. "We understand the regulations are being reviewed and redrafted with this purpose in mind."

The exchange has said it has no power to order the sales of shares to GPG to be reversed.

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