Judge tells broker to release documents

By PAULA OLIVER

The Securities Commission and sharebrokers JB Were have been ordered to hand over interviews and documents relating to the insider trading investigation against former Fletcher Challenge chairman Kerry Hoggard.

In the High Court at Auckland yesterday, Justice Bruce Robertson ruled that a private challenge against Mr Hoggard should have access to the documents.

The ruling is an initial victory for the private consortium, led by commercial lawyer and Act MP Stephen Franks and Business Roundtable chief executive Roger Kerr.

The case against Mr Hoggard relates to his buying nearly $635,000 worth of Fletcher Challenge shares the day before the company's major restructuring was publicly announced last December. The shares jumped when the changes were revealed.

A Securities Commission investigation into the trading found that Mr Hoggard had clearly breached an important law, but no criminal prosecution followed.

"I always felt, as a Securities Commission member, that it should not be sitting there as if it was a neutral umpire, once it had a view that there had been some bad behaviour," Mr Franks said yesterday.

"I'm very pleased with the judgment; I couldn't have asked for a better one."

Both the Securities Commission and JB Were opposed handing over the documents, which included:

Securities Commission statements or transcripts of interviews relating to Mr Hoggard's trading;

Material provided by JB Were or others to the Securities Commission relating to the transactions;

Documents concerning a Herald reporter's contact with Mr Hoggard on December 15, 1999;

Securities Commission documents relating to how the inside information affected the market when it was publicly released;

JB Were's documents on the day of the sale;

JB Were's internal memos or documents that were used in discussions about the day of sale, either internally or to the commission.

Yesterday afternoon, Mr Franks said the documents were needed so that a judge could decide what kind of penalty to hand out to Mr Hoggard, should he be found liable.

"A judge is going to need to know the moral or ethical quality of the act, so that's why we're looking for this extra evidence," the MP said.

If found guilty, Mr Hoggard could be ordered to pay up to three times the gain or loss of his trading. Or he could be ordered to pay three times the value of the securities involved. He has said the gain was around $50,000.

Insider trading laws have come under fire in recent months, after the lack of action against Mr Hoggard was followed by an investigation into former Wilson Neill director Paul Hyslop. That too ended without any prosecution.

"We're trying to get the message out that the business community will pursue you, so it's not worth it," Mr Franks said.

"The wrongdoers have felt in practical terms that no one is going to catch up with them."

Justice Robertson ended his ruling with the statement: "On a sensible balancing of competing interests, the commercial convenience and confidence between sharebroker and client is of much lesser importance than the integrity and enforcement of the statutory regime for curbing insider trading."