New Laws to Strengthen Markets - Minister of Commerce Media Statement
[ Last Updated 12 December 2005 ]
Media Statement by Hon Margaret Wilson, Minister of Commerce
Commerce Minister Margaret Wilson today introduced to Parliament a bill designed to strengthen the laws on insider trading and other financial market misconduct.
"The Securities Legislation Bill will build confidence in New Zealand securities markets and attract the capital investment New Zealand needs to achieve its growth aspirations," Margaret Wilson said.
"The Securities Markets Act 1988 does not provide effective insider trading laws. Current laws are complex, difficult to enforce and contain trading prohibition clauses that are relatively easy to avoid. No one has been found liable for insider trading since the act came into effect. When coupled with research showing an enforceable insider-trading regime can increase market liquidity, the need to beef up our insider trading legislation becomes very apparent.
"This Securities Legislation Bill broadens the definition of insiders prohibited from trading. It introduces criminal remedies for insider trading as well as increasing civil penalties. Increased penalties under this bill focus more on the harm insider trading causes to the wider market, not just the impact it has on particular companies."
New market manipulation laws will prohibit practices that create a false impression of trading activity, price movement or market information. The Securities Commission and the Takeovers Panel will be provided with a comprehensive range of penalties and remedies to help enforce breaches of the law.
Disclosure rules will also be tightened under the bill. Simplified substantial security holder disclosure will make it easier for the market to understand the trading activities of those with significant voting rights in a public issuer. It will be mandatory for investment advisers and brokers to disclose more information to clients before giving them investment advice or receiving money. The Securities Commission will responsible for ensuring advisers comply with the law.
The bill is the third part of a four-stage securities law reform programme that began with the introduction of the Takeovers Code in 2001.
"We want to deter misconduct in our markets," Margaret Wilson said. "When investors see that we are serious about deterring, detecting, and punishing this sort of behaviour, New Zealand becomes a more attractive investment destination."
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