The Securities Commission is continuing to pursue its Court action against the remaining defendants in the Tranz Rail insider trading case, namely, Midavia Rail Investments and David Richwhite.

The claim is for some $25 million which will go to compensating shareholders, as well as defraying the Commission’s costs.

A Court of Appeal decision in December 2006 held that the Commission could not pursue penalties in addition to compensation. The Court held that this was because the two year period

for bringing a penalties claim must run from the date of the trading. The time period cannot be calculated by when information about the trading was "reasonably discoverable."

This decision does not affect the claim for compensation. The Commission has decided not to appeal the decision. Changes to the Securities Markets Act 1988 passed by Parliament last year mean that, in the future, claims for civil penalties will be able to be brought within 3 years of a breach of the law being reasonably discoverable.

The Commission originally filed proceedings in the Tranz Rail case in

October 2004. Six defendants were named in the proceedings. The basis for the action is that the parties who sold their shares had information about the company which was not publicly available and which would have affected materially, or would have been likely to affect materially, the price of the shares if it had been publicly available. Tipping actions were raised against Carl Ferenbach and David Richwhite.

The Commission has since settled the case against Michael Beard (for $155,691), Mark Bloomer ($156,000), Berkshire Fund III and Carl Ferenbach ($7.38 million).