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FMA lays insider trading charges

NZN 8/03/2017

The Financial Markets Authority has charged two ERoad staffers with insider trading, but stressed the software and hardware development company is in the clear.

The market watchdog has filed charges in the Auckland District Court that a current ERoad employee sent text messages to a former staff member containing confidential and material information about the company's performance in the period to September 30, 2015.

That former employee went on to trade 15,000 shares, it alleged in a statement.

The FMA has also charged one of the people with obstructing the regulator's information gathering powers. The trading was referred to the FMA by the NZX in November 2015.

Insider trading attracts criminal liability and legislation prevents people with material information that hasn't been disclosed to the market from sharing that or trading on it.

The measure is seen as a key mechanism for ensuring markets are fair and transparent, and can attract maximum penalties for an individual of a five-year jail term and, or, a $500,000 fine.

"The integrity of NZ capital markets is a strategic priority for the FMA," chief counsel Nick Kynoch said.

"Trading misconduct, such as insider trading, negatively impacts the integrity and reputation of our markets, and the confidence of people investing in them."

The FMA said ERoad's conduct wasn't part of the investigations and the firm hadn't been charged with any offence with the firm cooperating fully and helping the FMA throughout.

The logistics and fleet management tech company's shares last traded at $2.15, having sold at $3 apiece in its 2014 initial public offering.

The shares traded as high as $4.19 in March 2015 before slumping to $2.66 as at September 30, 2015.

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