The Securities Commission has launched a probe into trading of Allied Farmers shares, amid claims the market was not fully informed when the shares were traded.
A commission spokesperson has confirmed that the NZX's regulatory arm will refer last week's trading to the Securities Commission.
Allied Farmers is unhappy with two explanations from NZX, operator of the stock exchange, about its actions last week which informed a non-public group last Monday that ALF shares were to become part of the benchmark NZX50 Index from today, and then rescinded that position on Friday.
Allied Farmers shares rose 23 per cent over the week, before falling more than 11 per cent on Friday after the reversal of the earlier indication was sent to market participants.
This had lead to the claims that some could buy shares with information about the company that was not widely circulated to the rest of the market.
NZX said: "As advised on 19 February, the Index Group at NZX distributes a monthly index memo to a wide group including data vendors, fund managers and market participants. The distribution of index-related information via these channels is common global practice.
"Index information does not originate from the Issuer. As such it falls into the category of broader market-related information that is factored into investment decisions and/or recommendations.
There are many factors which are external to an issuer that may be of interest to investors in stocks, such as research reports, credit ratings and the like."
Allied Farmers chief executive Rob Aalloway said the explanation did nothing to allay his concerns about NZX, both from a listed company perspective, and as an investor.
"Here we have the New Zealand market operator disseminating information which will have material influence on a stock to a select few people," he told BusinessWire. "That's the biggest issue I've got."
FRAN O'SULLIVAN / BUSINESSWIRE
See the NZX's Feb 19 media release here
