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2009 Annual Report

STATEMENT OF OBJECTIVES

FOR THE YEAR ENDING 30 JUNE 2009

The Minister of Commerce and the Securities Commission have agreed that the Commission will deliver the following:

Surveillance and enforcement - monitoring securities market activity, inquiring into suspected breaches of securities law and taking actions to enforce the law.
Oversight and supervision - oversight of NZX's performance of its regulatory function and preparation for potential supervisory roles under Government reforms.
Law and practice reform - reviewing securities law and practice and making recommendations for reform.
Exemptions and authorisations - considering and deciding on applications for exemptions from the provisions of the Securities Act 1978, Securities Markets Act 1988 and the Securities Regulations 1983;
considering and deciding on applications for authorisation of market participants, including futures exchanges and dealers, trustees and statutory supervisors; reviewing existing authorisations.
International liaison - promoting New Zealand's markets as well regulated, keeping abreast of developments in global standard setting and contributing the Commission's views to this process.
Public understanding - promoting public understanding of the law and practice of securities.

(Page 5 of the Output Agreement between the Minister of Commerce and the Securities Commission for the period 1 July 2008 and 30 June 2009)

STATEMENT OF SERVICE PERFORMANCE

Performance standards and measures for the outputs of the Commission for the year ending 30 June 2009

OUTPUT 1: Surveillance and enforcement

Monitoring securities market activity, inquiring into suspected breaches of securities law and taking actions to enforce the law.

Activities

Monitor securities market activity and take enforcement action in the following areas:

Primary market - offer documents, illegal offers, contributory mortgages.

Secondary market - insider trading, market manipulation, secondary market disclosures (substantial security holder disclosure, continuous disclosure, disclosure of trading by directors and officers).

Intermediaries - futures dealers, investment advisers.

This is done by:

reviewing practices of market participants and issuers
assessing referrals from NZX
monitoring market disclosures
reviewing offer documents and advertisements for securities
responding to public complaints
using compulsory information-gathering powers (inspections, summons)
commenting publicly on market practice
accepting enforceable undertakings
reviewing financial reporting by issuers
reviewing corporate governance reporting
acting on behalf of overseas commissions
prohibiting advertising
removing offer documents from the market
taking civil enforcement action in the Courts
referring for prosecution
making other compulsory orders.

	Performance standards
Performance measures Surveillance and Enforcement	Actual 2009	Budget 2009
Quantity
Complete surveillance actions that meet the Commission’s case criteria relating to the above matters.	88	132
Complete the enforcement actions that meet the Commission’s case selection criteria, relating to the above matters.	2 actions completed	5
One key area (e.g. finance companies or adviser disclosure statements) is identified, investigated and reported on.	1 key area covered – investment adviser disclosure (is an ongoing programme of work)	1
Complete the financial reporting surveillance programme.	2 cycles completed	2 cycles in the year
Quality
Surveillance and enforcement resources are applied in accordance with the Commission’s market surveillance and enforcement priorities.	Full compliance	Full compliance
The desired regulatory result is achieved in surveillance cases where deficiencies are identified.	98%	90%
Enforcement actions achieve the desired regulatory result.	100% for actions completed Progress was made for finance company enforcement, and investment adviser disclosure	80%
There is no successful judicial review of the Commission’s decisions or actions.	100%	100%
Timeliness
Complete surveillance actions.	2.09 months	On average within 3 months
Progress civil enforcement actions from investigation to the filing of proceedings.	17 months	On average, within 24 months of commencement of investigation
Complete other enforcement actions.	2.5 months	On average, within 6 months of action commencing
Complete financial reporting surveillance reporting programme.	8.6 months	On average within 9 months of commencing each cycle
Cost
Expenditure allocated to surveillance and enforcement work.	37%	38%

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