Former CBL managing director Peter Harris ordered to pay $1.4 million by High Court

Former CBL managing director Peter Harris.

Former CBL managing director Peter Harris has been ordered to pay a $1.4 million penalty for continuous disclosure and misleading conduct breaches, the High Court ruled in June.

The decision was released only this week after a long-running battle between the Financial Markets Authority (FMA), Harris and other former CBL staff.

In March, Harris admitted to the breaches, brought by the FMA in 2019.

The in-court settlement saw Harris making admissions to seven contraventions of the Financial Markets Conduct Act 2013 (FMCA) and agreeing to an enforceable undertaking that he will not hold any management or directorship positions with any listed issuer or licensed insurer in New Zealand and will not participate in any regulated offer in New Zealand.

It also brought an end to the continuous disclosure proceeding against Harris, one of two filed by the FMA.

The IPO (initial public offer) proceeding brought against CBL, Harris, former chief financial officer Carden Mulholland and the estate of former non-executive director Alistair Hutchison, who died in December 2021, is set down for April 2026.

The continuous disclosure proceeding relates to CBL Corporation Limited, now in liquidation, failing to disclose material information to the market during 2017 and 2018.

The FMA alleged that:

• CBLC failed to comply with its continuous disclosure obligations in relation to:
• the need for its primary operating subsidiary, CBL Insurance Limited (In Liquidation), to strengthen its reserves;
• the existence and impact of a large amount of aged receivables (insurance premiums owed but not paid) in respect of business originated by Securities and Financial Solutions Europe SA, a French insurance business; and
• directions issued to and conditions imposed on CBLC’s subsidiary in Ireland, CBL Insurance Europe dac, by the Central Bank of Ireland; and
• CBLC engaged in misleading and deceptive conduct in respect of its market announcement on August 24, 2017.

Speaking on the decision released this week, Justice Ian Gault said such breaches undermined market integrity and transparency.

“They are unfair to investors, and jeopardise confidence in the integrity and transparency of New Zealand’s financial markets,” Gault said.

“Any penalty must bear in mind such harmful effects.”

Margot Gatland, FMA head of enforcement, said the level of penalty reflects the seriousness of the breaches that occurred.

“As the court states, disclosure is a fundamental obligation which ensures New Zealand’s listed capital markets are efficient, transparent and fair, and that there is equality of information in the market. Harris’ actions fell well below the requirements of the FMCA.”

CBLC listed on the NZX’s main board in 2015 and was put into voluntary administration in February 2018. It subsequently went into liquidation in May 2019.

The defendants have previously settled separate civil proceedings brought by shareholders and liquidators for $72.5 million.

About 53% of that settlement sum has been or will be paid to CBLC shareholders who participated in the proceedings. The settlement was entered into without any admission of liability by the defendants.