Insider trading law ‘fierce’

Press, 22 June 1989, Page 28

Insider trading law ‘fierce’

The new insider-trading law, which forced the chairman of the Bank of New Zealand, Mr Frank Pearson, to resign, was "unbelievably fierce,” another BNZ director, Len Bayliss, said yesterday. But Mr Bayliss, also a director of the investment company, Government Life, said "common-sense” had to prevail in boardrooms as they grappled with the new rules. He saw no conflict of interest in his own directorships.

The new rules are contained in the Securities Law Reform Act, passed last December, but only now being analysed by boardrooms. They led Mr Pearson to announce last Friday his resignation so that he could continue his full-time job as an investment funds manager for Colonial Mutual Life.

Mr Bayliss said the new rules were so restrictive they “would almost make things impossible”. He said, however, tougher laws were needed against insider-trading: “We’ve had too much lying skullduggery by people making themselves richer. It’s unrealistic to ex-

pect it not to happen. But you’ve got to make bloody sure you try to stop it happening." The Opposition member of Parliament, Mr lan McLean, has said the BNZ deputy chairman, Ms Susan Lojkine, may have a conflict of interest as she also chairs the Commerce Commission.

Lawyers have told reporters that this is unlikely to be the case, but they believed the incoming Capital Markets directors, Messrs Michael Fay and Robin Congreve, were in a "hell of a difficult situation” because of their parent company Fay Richwhite’s involvement in banking and investment. Mr Fay could not be reached, but of his own position, Mr Bayliss said Government Life had taken extensive legal advice.

"The conclusion I’ve reached is that commonsense prevails. If there is the slightest doubt you make a declaration of interest, absolve yourself from discussion, leave the room or ensure you have no contact with the matter discussed,” Mr Bayliss said.