Forum Archive Index - November 2000

["Steve Moxham" <stevemox@e3.net.nz>]

From the Securities Commission:

 

The Commission generally investigates possible breaches of insider trading
law either on referral from the New Zealand Stock Exchange or on receiving a
complaint from a member of the public.  It is important to recognise that
unusual events in a securities market may have a number of explanations.
Malpractice is only one of them.

The general process for detecting and investigating breaches is:

* The Exchange's Market Control staff monitor price movements and
trading volumes.  If unusual price movement or trading volume is detected
they will usually seek the advice of a designated panel of brokers.

* After taking the advice of the broker panel the Market Control staff
may refer the matter to the Market Surveillance Panel who can make a price
enquiry of the listed issuer.

* If there has been significant trading prior to a company
announcement the Market Surveillance Panel will usually refer the matter to
the Securities Commission.

* The Panel's referral describes the unusual trading or price movement
and any relevant company announcement, and is accompanied by a printout of
trades.

* Commission staff examine the trades and seek details of trades from
certain brokers.  Initial responses from brokers are in the form of
printouts from the brokers' trading system which display trades completed,
client names, price, and the date of each trade.

* After reviewing these responses the Commission may seek further
details of certain individual clients or trades from brokers.  The
Commission may also require brokers to produce trading records including
audio tapes of telephone calls.

* Where this review highlights the trading of particular persons the
Commission may require explanations from these persons of their trading.  At
this stage the Commission might formally institute an inquiry and may take
evidence from persons involved in trading.

When unusual events occur in the markets we examine them carefully. The
processes we follow are detailed and inevitably time-consuming.