Govt to adopt law on insider trading

Press, 24 March 1988, Page 31

Govt to adopt law on insider trading

PA j Wellington Insider trading will be made unlawful and greater company disclo-j sure required under legist lation [to be introduced) this year, the Minister [of Justice, Nr [Palmdr, said: yesterday. I The measures were recommended ! in a Securi] ties Comnilssion report bn insider trading last year, which the Government had decided yesterday [to adopt, j ) [ ) . ) ■['][) Changes would be accompanied by moves I in other areas to make sure the stocks and securities markets operated in the fairest way possible, both for companies and in--vestors. [ ; i ~ [| 1 “It is important to have a fair market place in which people have a 1 reasonable chance of knowing what is going on and make rational decisions about their investments,” Mr Palmer told a press conference. The new measures were [ not a knee-jerk reaction to last October's share market crash, but that had. ■: ■ I ‘ ' ■

highlighted the need for a ‘tfair [markets strategy.” i “Stope the share market crash!) a number of tostances have come to the I public) attention I where! you can say the shareholders did hot know some))of the things [they had a) right, to know.” i NeW Zealand also had to catlch up with [ international law and shake its reputation as the '“last Wild |West show” for inside traders. I VOtner countries do not regard the New I Zealand! tnarkets with favour because ! of |f their ) strange characteristics in regard to insider trading and lack of disclosure,” Mr Palmer said.) | i ! 1 ! [“Ndw Zealand (markets have been described by; some as the) last; frontier of; ihose who wish to manipulate the price of shares to their ) own gains)’ j I ...! 1 1 [ i Thd| Government was also following the Security Commission’s recoihmendation| that it look into rnaktog insider trading illegal, put it was not enact-

! irig anything in this package, Mr Palmer said. ; I ‘’Those sorts of laws are extremely difficult to enforce, lit is very hard to get convictions and I the expense: of j.j investigation' is quite enormous.” [Changes to,the criminal law were “quite possible" however. [I ) | Proposed [ j legislative changes Mr iPalmer outlined were: .j. [ ,|.': . [ | I • The reporting of substantial shareholdings and interest iri shares in listed companies will be required. j| . :i >•[ A right to , recover compensation) | if; people have suffered loss through dealing! with an insider with cohfidenltial information relevant to the. transaction. ) I'J II)" - ! ■ • Companies jjwjlll be ■ able! to; recover from) inside |-traders I an I! amount equal to the! gains! made or; the losses avoided. ) [• Disqualification)! by the courts lof J an) insider from holding'an office, in a company and to revoke his or her sharebroker’s ; |j | | ;j l i !