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Michael Beard to face insider trading charges

<p>The New Zealand Securities Commission has filed insider trading charges against Michael Beard and some other former leading shareholders in Tranz Rail.</p> <p>Mr Beard, the former managing director of Tranz Rail and a past chief executive of the Australia New Zealand Direct Line, was named in commission’s proceedings.</p> <p>Also named were former Tranz Rail directors Carl Ferenbach and David Richwhite, the company’s former chief financial officer Mark Bloomer, Midavia Rail Investments and the Berkshire Fund III A.</p> <p>The civil action was filed in the High Court in Wellington this morning (Wednesday, October 13)</p> <p>The charges follow a lengthy investigation both in New Zealand and overseas, and they represent the first time the commission has exercised its powers to take court action for insider trading.</p> <p>Tranz Rail is now known as Toll New Zealand and the investigation is understood to relate to a period before Toll Holdings became the majority shareholder in the company.</p> <p>The commission said its inquiry had focused on share sales in the first half of 2002, before Tranz Rail’s share price rapidly deteriorated from middle of 2002.</p> <p>At the beginning of 2002, Tranz Rail’s share price was NZ$4 and by April 2003 it had plummeted to a record low of $0.30, the commission said.</p> <p>The inquiry obtained documentation in New Zealand and abroad as well as oral evidence, the commission said.</p> <p>"The basis for the proceedings is that the parties who sold their Tranz Rail shares had information about the company which was not publicly available and which would have affected materially, or would have been likely to affect materially, the price of the shares if it had been publicly available," the commission said.</p> <p>The inside information concerns a number issue,s including Tranz Rail’s forecast financial performance and capital expenditure, its asset and investment writedowns and the company’s financial obligations and creditworthiness.</p> <p>It also covers RailAmerica’s unsuccessful bid for the company in 2003.</p> <p>The commission has also lodged an additional "tipping action" against Mr Ferenbach, who represented the Berkshire Fund III A, and against Mr Richwhite, who represented Midavia, an investment vehicle controlled by Fay Richwhite interests.</p> <p>The proceedings seek compensation for the losses the traders avoided and financial penalties imposed.</p> <p>A commission spokeswoman told <em>Lloyd’s List DCN</em> that the court could impose a maximum penalty of up to three times the profits made or losses avoided.</p> <p>The court is yet to set a date for the proceedings, she said.</p> <p>A Toll New Zealand spokeswoman declined to comment on the charges.</p> <p>"We are not a party to the proceedings and we have no further comment," she said.</p> <br />