1491883923396 - Guilty plea in first insider trading criminal prosecution

Guilty plea in first insider trading criminal prosecution

A landmark insider trading case involving trading in NZX-listed Eroad shares has led to a guilty plea from one of the defendants.

But allegations that same person obstructed an investigation into the trading have been dropped.

Last month, the Financial Markets Authority said it had filed insider trading charges against a current and former employee of Eroad.

Nobody has been criminally convicted of insider trading in New Zealand before.

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The FMA alleged the Eroad employee sent a text message to the former employee in September revealing confidential information about the company’s financial performance, after which the former staffer traded 15,000 shares in the firm.

The shares would have been worth about $30,000.

Eroad’s shares fell by about a third between late September and early October.

On Tuesday, the FMA said one of the accused had pleaded guilty to one charge of insider trading in the Auckland District Court.

Two charges of obstruction were withdrawn by the FMA, and the defendant, who was given interim name suppression, would be sentenced in June.

FMA general counsel Nick Kynoch said the market regulator was satisfied with the outcome.

“While obstructing the FMA is treated seriously, in this instance we have achieved our regulatory objectives with the defendant’s guilty plea to insider trading.”

The other defendant was yet to appear before the court.

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