Insider change on cards

Commerce Minister Paul Swain yesterday likened existing insider trading penalties to a burglar returning stolen goods without further punishment.

He said he was worried that New Zealand's lack of criminal sanctions against insider trading had undermined confidence in the stock market.

His comments came in the wake of the scandal involving former Fletcher Challenge chairman Kerry Hoggard who this week was found by the Securities Commission to have broken insider trading laws.

Mr Hoggard bought 390,000 Fletcher shares last December on the eve of a major company announcement. He later repaid $58,000 to shareholders who lost money when the stocks rose, as required by existing law.

Mr Swain said the Government wanted a debate on making insider dealing a criminal offence.

On the Kim Hill radio show he said: "It's a bit like a burglar saying well if I pinch a stereo and sit on it for a while and then I get caught, as long as I hand it back that should be the end of it.

"I don't think that's actually right and I don't think society thinks that's right."

Mr Swain expects a discussion paper to be issued in August, with any law changes following next year. The paper would canvass the possibility of joint actions against insider traders, and giving the commission powers to launch prosecutions.

"With cases highlighted like this, there is a perception that the rules aren't right, that people can play unfairly and get away with it."

He said by making the rules fair, investors would be encouraged to return to the sharemarket.