14 November 2005
Information Control in Market Participant Firms
The Securities Commission has issued a report highlighting the need for market participants to have good information
controls (Chinese walls).
This report arises from the Commission’s inquiry into trading in shares of Wrightson Limited in June 2004.
The report concerns activities of ABN AMRO Craigs Limited, a NZX firm, during a takeover offer in 2004. The firm, acting
for the offeror in the takeover, received non-public information that a substantial security holder intended to accept
the takeover offer. It passed this information on to two other NZX firms, and to its own client advisers, before the
information was released to the market.
The Commission’s inquiry arose from a complaint by Wrightson Limited, the company which was the subject of the takeover.
“The decision by ABN AMRO Craigs Limited to distribute non-public and potentially sensitive information about the
takeover to select firms and to its client advisers ahead of the market being informed was inappropriate and was not
required by its client mandate”, Commission Chairman Jane Diplock said.
“Selective disclosure of information in this way, while not unlawful, is not acceptable practice on the part of a market
participant. This case illustrates the need for all market participants to have robust information controls.”
The inquiry highlights that market participants not only need to have policies and procedures in place, but also to
ensure that people handling non-public and price sensitive assignments are aware of and adhere to these procedures.
The Commission’s report, “Information Control in Market Participant Firms” is available at www.sec-com.govt.nz or by
contacting the Commission on 04 472 9830.