Court orders Ex- CBLC four to pay penalties

The High Court has ordered CBL Corp ( CBLC) and four of its former directors to pay penalties for continuous disclosure and misleading conduct breaches following proceedings brought by the Financial Markets Authority ( FMA).

The proceeding related to CBLC, then a listed entity, failing to disclose material information to the market during 2017 and 2018.

CBLC and the four directors — Sir John Wells ( who was chairman of the CBLC board), Tony Hannon, Paul Donaldson and Ian Marsh — entered into settlement agreements with the FMA in May this year.

Wells, Donaldson and Marsh were each ordered to pay the jointly submitted penalties of $ 1 million; Hannon was ordered to pay the jointly submitted penalty of $ 1.1m.

Hannon’s penalty was higher than that of the other directors to reflect his elevated culpability in respect of one of the breaches.

CBLC was ordered to pay the jointly submitted penalty of $ 5.78m.

Because the company is in liquidation, the FMA said it would not seek to enforce payment of the penalty so that CBLC’s assets can be used to repay creditors and investors as much as possible.

In his decision, released yesterday, Justice Gault agreed with the FMA that “the present case is the epitome of what the fair dealing provisions and continuous disclosure regime are designed to prevent”.

“The conduct was completely inconsistent with promoting the confident and informed participation of business, investors and consumers in New Zealand’s financial markets”.

The lack of accurate disclosure “meant that investors were wholly unaware of the escalating problems at CBLC”.

The FMA’s head of enforcement, Margot Gatland, said the case showed the FMA would hold to account companies and directors for breaches.

“Disclosure is a fundamental obligation which ensures New Zealand’s listed capital markets are efficient, transparent and fair, and that there is equality of information in the market.”