O'Sullivan: Feeble commission fails to lay down insider law

It's weak knees - not weak law - which stops the Securities Commission clamping down on market manipulation.

Its investigation into the accidental release of inside information on Fletcher Challenge's May 1999 restructuring proves only one thing: The Commission has lost none of its taste for taking the easy way out in its inquiries into sharemarket malfeasance.

Who seriously believes that the quaintly initialled "CD" and "EF" did not consider they might have been acting on inside information when they first acquired significant share parcels, then, in EF's case, sold out at a $40,000 profit after the price of Fletcher stocks was ramped up through the selective release of the draft statement to some hand-picked brokers and journalists?

Why else would the pair have bought parcels of 150,000 and 300,000 shares in the first place?

The Herald's story of April 30, 1999 - which foreshadowed the sale of Fletcher Paper - did not persuade either of them, at that stage, to fork out hundreds of thousands of dollars.

It was not till they - "independently" - got hold of the draft statement that they put their dollars on the line.

I know the commission has done its usual so-called in-depth investigation into the Fletcher Challenge affair.

Were oaths sworn on Bibles, and did the lawyers make their cases "in camera" to the commission?

I'm afraid the O'Sullivan bullshit detector is working overtime on this one.

When a financial journalist used his column to ramp up share prices more than a decade ago, the commission came down on him and his employers heavily. The commission harumphed in its typical tut-tutting fashion and used the episode as part of its justification of the need for inside dealing laws.

The information on which our market profiteer "EF" made a nice little earner differs from that of our financial scribe, who was, to put it politely, over-egging the prospects of his subjects.

The Fletcher Challenge information was clearly true.

The Securities Commission has been in this game a long time. It has the power to name the unethical players, but chose not to.

It landed the market with deficient laws well after the 1980s sharemarket boom and bust. And it has lacked the intestinal fortitude to offend the club.

Players such as former Bank of New Zealand shareholder Donald Kincaid and former Wilson Neill shareholder Brian Gaynor have had to fight the good fight on inside trading claims with little real help from the commission.

It's a pity Fletcher Challenge did not pursue this action on its own behalf in the first place.