KEY POINTS:
Two broking firms and their advisers have paid large sums of money to the NZX this year for breaches of stock exchange rules, the NZX Discipline panel's annual report shows.
In both cases the firms and advisers involved are not named but the cases involved settlements of $161,000 and $80,000.
The larger of the settlements is understood to relate to the allocation of Rakon shares at the time of its float last year.
An NZX firm and certain unnamed advisers took the highly sought-after stock for themselves rather than offering it to clients.
That breach of broking rules resulted in a penalty of $111,000 to nullify the profits the brokers made participating in the IPO. A further $50,000 was imposed as a penalty.
In the other case - understood to relate to the trading of shares in New Zealand Oil and Gas - an NZX firm and an adviser were penalised $10,000 and $70,000 respectively for "placing an order on behalf of a client to influence the closing price of a security".
NZX Discipline chairman Don Trow would not name the companies.
The panel did have the power to name names - and had done so in the past, he said.
The penalties were not the largest imposed but were sizeable, he said.
"The fact that they were full hearings indicates that they were in the more serious bracket," he said.
But people shouldn't interpret the rulings as a case of the panel "getting tough" with brokers, he said.
"We take these cases as they come," he said.
In both cases settlements were reached between the firms and the NZX which were then reviewed and confirmed by the panel.
The breaches were unusual and it would be wrong to assume these kinds of practices occurred with any regularity, Trow said.
"Generally the behaviour is very good. It has improved tremendously over the past 10 years."
Shareholders Association chairman Bruce Sheppard said the companies should have been named.
"Because that is the penalty. Without naming them it just becomes a monetary game," he said.
"It isn't a sizeable enough disincentive for this kind of market rigging."
Brokers said they had some sympathy with those involved in the Rakon case - because shares in that float had been scaled back so far that for many firms it became difficult to offer clients any meaningful stake.
The annual report summarises several breaches of NZX rules. But in most cases these were technical breaches related to the filing of documents - and incurred fines of $5000 to $10,000.
The NZX uses the penalties to cover the cost of running the Discipline panel and for market education.
BROKER BREACHES
* CASE 1: Penalties of $161,000 after brokers held onto stock in a highly sought-after IPO rather than sharing it with clients.
* CASE 2: Fines of $80,000 for a separate firm for placing an order on behalf of a client to influence the closing price of a security.
