Ex-chairman admits insider share trading

‘‘Insider trading erodes investor confidence in our markets, and we will pursue appropriate enforcement action.’’ FMA head of enforcement Karen Chang

A former director and chairman of arthritis remedy-maker Promisia Integrative must pay $75,000 to the Financial Markets Authority (FMA) after admitting to insider trading.

Eoin Malcolm Miller Johnson has to pay the $75,000 as part of an enforceable undertaking in lieu of a penalty for insider trading and breaching a director’s disclosure obligations. He committed the breaches between June and August 2016, shortly after resigning as a director and the chairman of Promisia. As a former director and chairman, he possessed sensitive sales information which had not been disclosed to the market when he acquired more than 2.5 million shares for $45,950 in Promisia.

The inside information related to 2016 budgeted and actual monthly sales of Promisia’s key product, Arthrem, which is marketed as a natural dietary supplement for maintaining and supporting joint mobility.

When the announcement (600 per cent sales increase for Promisia) was made to the NZX on August 30, 2016, Promisia’s shares jumped nearly 27 per cent in one day, the most significant shift in the company’s share price across 2015 and 2016.

Johnson was prohibited from trading in Promisia shares while being an ‘‘information insider’’ and also failed to disclose his share acquisitions to the NZX.

He admitted he knew, or ought to have known, that at the time of his trading, the Arthrem 2016 sales figures in his possession was material information not generally available to the market.

Johnson has been barred from acting as a director, senior manager or consultant for a listed company or any entities regulated by the FMA for the next five years. Johnson will also resign from all directorships he has not already resigned from, except for his personal and family investment companies – Aratas Consulting Services Ltd and Halland Investments Ltd – which are not regulated by the FMA.

Johnson was a director of Promisia for more than 13 years and chairman for three years.

FMA head of enforcement Karen Chang said: ‘‘Insider trading erodes investor confidence in our markets, and we will pursue appropriate enforcement action where we uncover misconduct. In this case, our regulatory objectives were to hold Mr Johnson to account for his actions and to deter similar conduct by others. We have achieved these objectives ... through public censure, payment in lieu of a penalty, resignation from other directorships, a management ban and admissions of insider trading.

‘‘This outcome sees Mr Johnson appropriately punished for his misconduct without further expenditure of public resources.’’