Wong Pansy: Securities Legislation Bill — In Committee 
Wong Pansy: Securities Legislation Bill — In Committee 
[Volume:634;Page:5473] 
PANSY WONG (National) 
: 
 Thank you Madam Chairperson—we really appreciate that you have reminded the Labour MP that this Part 1 is two-thirds of this bill. I suggest he uses his spare time to do a good thorough going over of Part 1. We still have a lot of issues we want to raise. I want to go on to discuss the insider-trading provision plus the investment advisers disclosure law. I want to echo the concerns raised by both of the previous National speakers. I appreciate that the Minister is taking calls—she might like to give us some assurance. 
I want to share a case. There is a credit card technology company—an Eftpos maker—that used to be known as Advantage Ltd and has changed its name to Provenco. In May 2003 Provenco conducted an on-market buy-back of $4.2 million of its own ordinary shares paying $1.4 million. The Securities Commission considered that the defendants received insider information about the future earning of the business. This case dragged on for a year and eventually the Securities Commission and the company came to a settlement whereby the company agreed to pay $622000. In the meantime the business had taken off and the company was doing very well. Both the Securities Commission and the company had come to this sensible settlement; both sides acknowledged that dragging on would not actually generate additional benefit. 
This case has reminded us that under the existing securities legislation insider information can be detected and dealt with. I hope the Minister will take a call and maybe alert us to additional problems that she felt necessitated the tightening up of the existing legislation. There is a balance to be struck. If we want businesses to thrive they have to take risks. My colleagues correctly questioned whether we are tightening the net too much; are we actually trying to correct the problem with too big a tool? Does this send the right type of message to the Securities Commission and does it send the necessary incentive to potential investors to invest in our market? 
The other important issue I raise is that I wish the Minister would share with us why it took a whole year for this legislation to be reported back to the House when National supported it. It contained a very important provision in Part 1: the disclosure by investment advisers. I want to share with the public the following very sad case. Recently three very high-profile finance companies went into liquidation. Let me share the saga of Provincial Finance Ltd. After it withdrew its prospectus on 10 April $9.5 million of investors’ funds were poured into that failed company. That suggests to us that there is some serious problem and that investors are not getting good advice or are not getting information. National definitely welcomes the provisions in Part 1 that enforce more disclosure by the investment advisers. Investment advisers will now have to disclose for example their qualifications their experience whether they are a member of a professional body and whether they have professional indemnity insurance. 
Investment advisers must also disclose whether they have certain criminal convictions. When a company withdraws its prospectus and $9.5 million of investors’ funds finds its way into the failed company it certainly suggests there is a market failure. I really want the Minister to take a call to tell us why she waited a whole year to bring back this legislation.