NZX blames Marshall for Access brokerage failure

NZX has laid the failure of Access Brokerage at the feet of the former managing director, Peter Marshall.

The exchange said yesterday it had formally commenced disciplinary action by serving a "statement of case" for breaching NZX participant rules on Access, through liquidator Ferrier Hodgson, and on Marshall.

The charges against Access are for alleged breaches of NZX Participant Rules by: failing to hold client funds on trust and separately from the company's own operating accounts; allowing the company's client funds account to go into overdraft; failing to maintain liquid capital at the prescribed level; and generally failing to maintain proper ethical standards.

The case against Marshall covers rule breaches relating to: responsibility for the company's failures, its failure to maintain proper ethical standards, and failure to attend an interview over the company's alleged rule breaches. Marshall was unable to meet investigators for several months because of ill health.

If Marshall or Access are found in breach of NZX rules, penalties of up to $500,000 could be imposed. Restitution to third parties caught up in the collapse can be imposed, alongside any private or public censure.

Marshall (through his lawyer) remained silent, but Michael Stiassny of Ferrier Hodgson expressed surprise at the action.

"We had been having discussions with the NZX but we still remain surprised to receive the papers. If I'm talking to someone I usually expect them to tell me before they do things," he said.

Asked how he would respond to the allegations on Access, he said: "We will be vigorously taking steps to ensure that no financial penalties will be incurred as this would be detrimental to the creditors."

Access, formerly owned by Olympic Games boss Bill Garlick, was placed in liquidation following its collapse last September when a $5 million deficit in client funds was uncovered.

The main creditor is the Bank of New Zealand, which combined with NZX to underwrite the shortfall in the Access trust account and pay out the company's 9500 customers.

NZX head of regulatory and public policy, Elaine Campbell, said NZX lawyers had given Marshall and the liquidators a "heads up" about the pending action.

She said a determination and any penalties were a matter for the independent body NZX Discipline.

"We as much as the liquidators are in their hands now," she said.

Campbell added NZX would not comment further until the disciplinary process was complete.

Meanwhile, NZX itself and the Bank of New Zealand may yet find themselves in the firing line. A fine by NZX Discipline could lead to the liquidators joining with BNZ to sue NZX for liability over letting the firm collapse in the first place.

BNZ spokesman Owen Gill said no decision had been made on pursuing NZX over the $4.5 million paid by the bank to Access clients.

"But we're not expecting to recover our money directly or immediately from the liquidation process," he said.

Last week's second liquidator's report said Access suffered accounting discrepancies dating back to at least June 1998, but it did not speculate on who might have been responsible, knowingly or otherwise.

Liquidator Brendan Gibson then estimated a loss to all of the company's creditors and claimants of about $3.7 million before liquidation costs. It is still unclear whether this will be fully recovered.