Richwhite wins venue battle

David Richwhite

The Securities Commission has relented and consented to the Tranz Rail insider trading court case being heard in Auckland rather than its preferred venue of Wellington, sources say.

The case, which the commission filed last October, has so far been dominated by pre-trial skirmishes between the commission and high-profile defendant David Richwhite over the venue.

It is the first time the commission has taken alleged insider traders to court.

The commission wanted the case heard in the capital, where it is based and where it filed proceedings last October, but Richwhite's lawyers sought a hearing on the commercial list at the High Court in Auckland.

The commission had indicated that it would challenge a Court of Appeal ruling that left the way open for Richwhite to seek an Auckland hearing.

But the Herald understands that after a phone conference between the parties last Thursday, the commission dropped its plan to go to the Supreme Court and consented to proceedings being held in Auckland.

Commission enforcement director Norman Miller would not be drawn on the issue yesterday.

"It is not a straightforward matter and I would prefer not to comment," he said.

The commission issued proceedings over $83 million of trades in Tranz Rail shares between February and May 2002.

It alleged six defendants avoided losses of up to $33 million by selling shares when they knew Tranz Rail had unpublicised problems.

The defendants are former Tranz Rail director Richwhite, his and business partner Sir Michael Fay's company Midavia Rail Investments, American investment fund Berkshire Fund III, its former managing director and ex-Tranz Rail director Carl Ferenbach and former Tranz Rail finance chief Mark Bloomer.

They face potential penalties totalling hundreds of millions of dollars.

The sixth defendant, former Tranz Rail chief executive Michael Beard, settled a $155,691 claim against him without accepting liability last December.

The remaining defendants all deny any wrongdoing.