Covid-19 coronavirus: The Warehouse Group's NZX declaration could result in hefty fine

The Warehouse Group was put in a trading halt yesterday afternoon. Photo / File

The Warehouse Group could face a fine of up to $500,000 if it's found to have breached NZX continuous disclosure rules in relation to the Covid-19 lockdown.

The retail company yesterday issued a trading update saying its Red Shed stores would remain open during the Government's mandatory four-week lockdown period as it was a provider of "essential" consumer goods.

The company's shares shot up by as much as 42 per cent at one stage following the announcement.

However, it soon became apparent The Warehouse was premature in its assessment of the situation with the Government making it clear that the company should not have reached the conclusion that it could stay open.

A trading halt was subsequently placed on the company's shares.

The stock exchange could not comment on whether it was investigating the incident.

Even if a company was being investigated by the NZX, the exchange would not disclose this.

In a statement, the NZX said: "NZX Regulation is not able to comment specifically at this time on the announcement released by The Warehouse yesterday regarding its assessment of its status under the recently announced Government categories of essential services."

It said the "assessment of information required to be released under the continuous disclosure regime is a matter for determination by each issuer" and that the regime imposes an obligation on companies to "prevent a false market developing in an issuer's shares which is materially influenced by false or misleading information emanating from the issuer itself".

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A spokesperson for The Warehouse said the executives were currently in "high-level" meetings with the Government but the company would be issuing a statement on the matter.

Under NZX rules, if there are concerns about breaches of rules, those matters are investigated and can be referred to the New Zealand Markets Disciplinary Tribunal, which has the ability to impose penalties.

According to the NZ Markets Disciplinary Tribunal, a penalty of up to $500,000 can be imposed on a "market participant, clearing participant, responsible person or derivatives participant" for breaching NZX rules.

If a company is found to have profited from a breach, "an additional fine equal to the profit derived from the breach" can be imposed. There is no limit on the value of this.