KEY POINTS:
"Don't call us, we'll call you," is the message from the Securities Commission to former Tranz Rail shareholders after the country's biggest insider trading settlement.
Liam Mason, general counsel for the Securities Commission, said people did not need to contact the commission to be eligible for a share of the $20 million paid by former Tranz Rail director and merchant banker David Richwhite and his company Midavia Rail Investments.
On Monday the Securities Commission announced it had reached a settlement in a long-running insider trading investigation into shares traded in Tranz Rail.
The case involved shareholders and directors selling shares for between $3.60 and $4.28 which were worth 30c a year later.
The commission had already reached settlements totalling $7.7 million with four other defendants.
Mason said money paid by all defendants would sit in a trust account held by Toll Holdings, formerly Tranz Rail, where it would remain until the commission received direction from the High Court on how the money should be distributed.
He said the court would need to determine what factors might make someone eligible for compensation.
"If someone did write to us right now there is no way that we'd know, yes or no," said Mason.
He expects the court process will begin in around two months, after which the commission will reconstruct trading based on share registers and brokers' records.
Mason admitted it would be hard to know when shareholders would receive compensation.
"We've never had a case remotely like this so it is terribly difficult to say."
Michael Horton, a former managing director of the New Zealand Herald's former owner Wilson and Horton, said he was very pleased for the Securities Commission in getting a "reasonably prompt" settlement in the case.
"It's quite a step forward for restoring dignity to the local market and putting people on guard," said Horton.
"In this case, although the defendants claim no admission of liability, everybody knows you don't pay $20 million if you're innocent."
Horton was an original complainant to the Securities Commission having "smelled a rat" around the glossy picture the company was painting while big shareholders and directors were disposing of their shares.
Horton said he kept an "elaborate file" on the sequence of events linking trading with the "propaganda that was going out at the same time", which he supplied to the commission.
Horton said his personal losses as a result of the insider trading would have amounted to $200,000, but the principle of pursuing the case was just as important as the money.
"I'm pleased for the marketplace," said Horton. "There was a lot of very bad behaviour like that went on in the 80s and 90s and it's bad to see it re-surface in the new millennium."
Nicholas Bagnall, investment manager for the Accident Compensation Corporation, one of the country's largest institutional investors, confirmed the ACC had bought Tranz Rail shares from Midavia, but had panicked early on and quickly sold most of them when they began to fall, thereby minimising its loss.
ACC would seek a share of any compensation on offer but the amount available and the relatively small loss it sustained meant that was unlikely to be substantial.
Bruce Shepherd of the Shareholders Association said some Tranz Rail investors would not have known they were victims of insider trading and would have sold their shares.
