ACT Gets Major Changes in Securities Markets Bill

Tuesday 4 Jun 2002 Stephen Franks Press Releases -- Economy

ACT Commerce Spokesman Stephen Franks achieved major changes to the Securities Markets Bill in select committee, but said the Bill remains a disgraceful Government stunt.

"I shamed them into reinstating the power for small shareholders to get independent legal advice in insider trading cases that the establishment would rather cover up. I reduced the stupidity of some of their provisions which ape Australian law, but this Bill is still a disgraceful political stunt. It curries favour ineffectually with the Aussies. Because it is not a complete copy they are more likely to despise our law than if we were openly pursuing a less costly, more simple and tougher line. In practice it will give New Zealand investors more, not less, reason to be suspicious about the integrity of the wheelers and dealers and the regulators in our markets.

"I thought the timing was odd when it first came in. The pathetic evidence trying to justify the Bill to the Committee supports ACT and National concerns that the main purpose of the Bill was to cover the embarrassment of the Government for its breaches of normal securities market ethics when it bounced Air New Zealand's price around last September as the dithering over that company's future finally ended.

"The Bill also completes the unplanned nationalisation of the rules that determine the value of listed company status. Stock Exchange incompetence as well as the Government's lack of capital market knowledge led the Government more in that direction than any cunning plot, but the result is the same: Australianisation.

"The Committee received no evidence that Australia has been more successful than New Zealand in jailing fraudsters or enforcing honesty in securities markets, though Australia has clearly paid far more for its huge rule books. We saw no evidence that the world would mistake Australian law for international best practice.

"Worst, the long-overdue need to reform insider trading law has been postponed for yet another review. Instead the Government tried to sneak in repeal of two provisions that make it feasible for small shareholders to chase big fish even when the authorities don't want that. The Bill still abolishes one of these two rights - last year's court decision that the Securities Commission must help by providing relevant information in its possession.

"There are some sensible provisions. They are submerged among unsound new law. Markets won't have reputation for honesty unless commitment to enforcement is shown by action, not multiplying the powers, discretions and nominal penalties in the hands of the regulators," Mr Franks said.

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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