Whose Side Does the Commission Take?
Wednesday 15 May 2002
"I am not surprised by today's Securities Commission refusal to let us get an opinion whether there was unlawful tipping of Air New Zealand information," says ACT Commerce spokesman Stephen Franks.
"It continues the sorry tradition of Securities Commission blocking of practical enforcement of the law. We had to get a court order to force them to assist in last year's successful action against Kerry Hoggard. They have promoted a law change to make sure that can't happen to them again.
"The hearing of our application felt like being in surreal music video. It was hard to believe we were supposed to be on the same side, the side of the law. The Commission says there should be a low threshold for invoking section 17, and their 26 April report clearly does not cover the same issues we want the appointed lawyer to consider yet they kept asking me why the Commission's enquiry and report had not disposed of the issues. Their questions boiled down to `Where is your proof?, Have you got any new or relevant facts?, You don't know there is no conclusive defence!, Are you challenging our independence?'.
"I have enough experience not to quail at such hostility but what about the ordinary shareholder? In effect the Commission has said you don't need an opinion because we already have an opinion that the matter shouldn't go further. This decision means you'll be able to use it only if you can prove so much of your suspicions that you don't need the opinion anyway.
"But it may not matter as a precedent because of Commerce Minister Paul Swain's current Bill. Last year he strengthened section 17 as part of his trumpeted move to beef up insider trading law, by protecting the opining lawyer's communication against gagging defamation threats. Now, without explanation his bill completely abolishes section 17. Is the answer that the Securities Commission told him to? How can anyone think he knows what he is doing, putting in a vital provision one year and trying secretly to abolish it the next?
"Mr Swain's Commission also continues a tradition of calling for more law changes while ducking practical enforcement. Changes are needed, but when they get a chance, as with Mr Swain's Bill now in select committee, they don't fix any of the crucial problems. There is always a review around the corner. That's been the custom on insider trading since 1991.
"There is only one reason why the wild west label hangs around the New Zealand market. It is because the government used the label. Now their cynical political and government agency rule making and changing, instead of rule enforcing gives it new life," Stephen Franks said.