Two people charged with insider trading
The Financial Markets Authority (FMA) says it has filed charges in the Auckland District Court alleging breaches of the insider trading prohibitions contained in the Financial Markets Conduct Act 2013 (FMCA).
The charges were filed in relation to trading in shares of Eroad, a road user, compliance and commerical services company. The individuals charged are a current and a former Eroad employee. Eroad itself is not part of the investigation and the firm has not been charged with any offence.
The FMA alleges that the current Eroad employee sent text messages to the former employee containing confidential, material information relating to Eroad’s performance in the period to 30 September 2015. The former employee then traded 15,000 Eroad shares.
The charges are:
- Section 241 FMCA – information insider must not trade;
- Section 242 FMCA – information insider must not disclose inside information; or, in the alternative, section 243 FMCA – information insider must not advise or encourage trading;
The FMA has also filed charges against one of the individuals with insider trading, alleging obstruction of the FMA’s information gathering powers under the Financial Markets Authority Act 2011 (FMA Act). These charges relate to the FMA’s investigation into the matter.
The charges are:
- Section 61(1)(e) FMA Act – deceives, attempt to deceive, or knowingly misleads the FMA in providing evidence; and
- Section 61(1)(f) FMA Act – wilfully acts in contravention of any order made by the FMA under section 44.
The FMA says the Financial Markets Conduct Act prohibits insider trading on licensed financial product markets.
"This prohibition is one of the key mechanisms for ensuring that markets remain fair and transparent. The FMCA prevents people who hold material information that has not been made generally available to the market (inside information) from disclosing that information or trading on it. Material information is information that a reasonable person would expect, if it were generally available to the market, to have a material effect on the price of shares in the listed issuer."
“The integrity of New Zealand capital markets is a strategic priority for the FMA. Trading misconduct, such as insider trading, negatively impacts the integrity and reputation of our markets, and the confidence of people investing in them,” says FMA General Counsel Nick Kynoch.
The FMA says Eroad has fully cooperated with and assisted the FMA throughout its investigation.
It says NZX referred the suspicious trading to the FMA in November 2015.
Last updated on the 16th September 2019