FMA Files Criminal Proceedings Against Individual For Alleged Insider Trading

The Financial Markets Authority – Te Mana Tātai Hokohoko – has filed criminal proceedings against an individual for alleged insider trading relating to the buying and selling of shares in Heartland Group Holdings Limited (HGH).

The FMA alleges the individual traded, and encouraged others to trade or hold, HGH shares on several occasions between July 2020 and February 2021, while holding material information that was not generally available to the public. The individual also disclosed material information that was not generally available to the public to others. The individual was a junior Heartland Bank Limited (HBL) employee at the time of the alleged offending.

The matter was first referred to the FMA by NZ RegCo – NZX’s frontline regulator – in December 2020.

Neither HGH nor HBL have been the subject of the FMA’s investigation and are not party to the FMA proceeding. Both HGH and HBL have cooperated with the FMA throughout its investigation.

About insider trading

Sections 240 - 243 of the Financial Markets Conduct (FMC) Act prohibit people who hold material information about an issuer that is not generally available to the market (inside information) from trading with that information, disclosing it in certain circumstances, and advising or encouraging other individuals to trade the issuer’s shares.

Unethical trading activity can undermine market integrity and erode investor confidence at a fundamental level. Participants in financial markets must operate on the basis that all trades are legitimate and based on equally available information.

The FMA considers it critical to uphold the law in this area to maintain investor confidence, but also to maintain credibility for those market participants who are willing compliers.

Criminal insider trading can be punishable with up to a term of imprisonment not exceeding five years, a fine not exceeding $500,000, or both for individuals.

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