Insider trading inquiries
The Commission completed two reviews of trading in the shares of Tranz Rail Holdings Limited.
One related to trading at the time of the announcement on 6 June 2003 of the heads of agreement with Government. The other related to trading undertaken by Toll Holdings Limited following a due diligence carried out on Tranz Link Limited (a subsidiary of Tranz Rail).
We are not taking further action in the two matters. Our other inquiry into trading in the shares of Tranz Rail continues.
We have also concluded a review of trading in the shares of Rocom Wireless Limited. This was at the time of the announcement on 19 June 2003 about a proposed transaction involving World Billing Services. No further action will be taken in the matter.
|
Market Conduct Rules - the Commission's role
The Securities Markets Act 1988 requires securities markets operated by registered exchanges to have conduct rules.
Although New Zealand Exchange Limited (NZX) is currently the only registered exchange, other exchanges may seek to register in future, and the Minister may require exchanges to register under the Act in certain circumstances.
Conduct rules for securities markets must contain both listing rules and business rules. The listing rules relate to the relationship between issuers and the market, and the business rules provide for the conduct of business on the market and of persons authorised to trade on the market. The Act also requires the conduct rules to provide for continuous disclosure of material information by issuers to the market.
Registered exchanges wishing to change their conduct rules, or introduce conduct rules for a new securities market, must provide the proposed changed rules or new rules to the Minister.
The Minister has two processes to deal with new or changed rules - the approval process and the disallowance process. The Minister may choose to follow the approval process. If she does not, the disallowance process applies.
The Minister may only apply the approval process if the conduct rules relate to a new securities market and she considers that it is in the public interest to apply the approval process. The Minister must consult with the Commission before deciding whether or not to apply the approval process.
Under the approval process, the Minister, if she is satisfied with the conduct rules, recommends that the Governor-General approve the conduct rules by Order in Council. The registered exchange in question cannot operate the new securities market until the conduct rules have been approved.
Under the disallowance process, by contrast, the conduct rules come into force unless the Minister disallows them by giving notice in the Gazette.
In each case the Commission must advise the Minister.
The Minister must recommend that conduct rules be approved unless she is satisfied that it is not in the public interest to do so, or that the proposed conduct rules do not provide satisfactorily for continuous disclosure.
Similarly, under the disallowance process the Minister must not disallow all or part of a proposed new conduct rule unless she is satisfied that it is not in the public interest to do so, or that the proposed conduct rules do not provide satisfactorily for continuous disclosure.
|
|
Statutory managers recover assets and cash
People who paid money to the Tauranga-based trusts that were placed into statutory management in July are likely to get at least some of their money back, according to statutory manager John Waller of PricewaterhouseCoopers.
Three corporations and three individuals were placed into statutory management after an urgent meeting of government ministers in July.
They are Asset Protection, International Investment Unit Trust, Timberland Trust, as well as associated persons, Donald Moris Rea, Catherine Linda Trezona and Lisa Shirlee Talbot.
"We have recovered a number of assets from third parties and located large sums of money in overseas bank accounts that we are endeavouring to return to New Zealand," John Waller said.
The statutory managers are realising the property assets and taking legal proceedings to repatriate cash held in Donald Rea's name in overseas jurisdictions.
The Commission recommended statutory management because the corporations and individuals appeared to be illegally raising funds in schemes which promised substantial returns on fake investments.
The schemes were similar to prime bank schemes where the promoters take the investors' funds from the scheme. They do not invest the money or invest very little of it. Money from new investors is used to repay old investors until the source of new investors dries up. This is similar to a 'Ponzi' scheme.
Ponzi schemes are named after Charles Ponzi who duped investors with a speculative postage stamp scheme in the 1920s in the United States. Nowadays prime bank and similar schemes work on the same principle of 'robbing Peter to pay Paul', as money from new investors is used to pay off earlier investors until the whole scheme collapses.
We again warn people against schemes promising to pay very high returns and which claim to be "secret" or open only
to a select few people.
|
