Dalziel Lianne: Securities Legislation Bill — In Committee 
Dalziel Lianne: Securities Legislation Bill — In Committee 
[Volume:634;Page:5469] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I was hoping there would be other things I could respond to but I will go back to Brian Connell’s speech which raised a couple of points that I ought to respond to. 
The first point Brian Connell raised was about new section 8A “Who is information insider” which is proposed to be inserted by clause 21 of the bill. He raised questions about insider trading including who an information insider is and whether “material information relating to the public issuer that is not generally available to the market;” would be caught by his example of some bright young market analyst who goes with binoculars to take a vantage point overlooking the activities of the Auckland wharf—this was the example he used in his second reading speech and has repeated again tonight. 
In order to find the answer to that question we really have to go to new section 4 of the bill which is proposed to be inserted by clause 20. New section 4(1)(a) talks about information being generally available to the market if “(i) it is information that has been made known in a manner that would or would be likely to bring it to the attention of persons who commonly invest in relevant securities; and (ii) since it was made known a reasonable period for it to be disseminated among those persons has expired; or (b) if it is likely that persons who commonly invest in relevant securities can readily obtain the information (whether by observation use of expertise purchase from other persons or any other means); or (c) if it is information that consists of deductions conclusions or inferences made or drawn from either or both of the kinds of information referred to in paragraphs (a) and (b).” That new section makes it clear that the example the member uses would not be caught by the insider trading provision. I would like to offer him that assurance. 
The second question Brian Connell raised was about Supplementary Order Paper 59 which makes a number of relatively minor amendments to Part 1. A number of those amendments were brought up with officials by the financial services industry after the bill had been reported back from the Commerce Committee. So we have been working on the Supplementary Order Paper for quite some time. It is not an ideal circumstance but the bill had already been reported back from the select committee there had been a general election between times and in the meantime we had been talking to various market participants about this particular Supplementary Order Paper. 
I will quickly run through the key changes to Part 1. It ensures that capital market advisers are not caught by insider trading or continuous disclosure provisions of the bill providing they are legitimately advising their client on its own activities. I think that was a partial question that the member raised. It extends the time period for bringing civil proceedings from 2 years to 3 years to enable the Securities Commission and others to have sufficient time to detect and investigate behaviour before bringing proceedings. It clarifies that the Securities Commission can recover its actual costs rather than court costs where it brings a successful civil pecuniary penalty proceeding. It requires investment advisers only to disclose to a potential client an adverse finding against it by a court not an adverse finding by a disciplinary body. When we worked through that issue we thought some relatively minor breaches could bring an individual in front of a disciplinary body. If that individual had to disclose each breach then he or she may not join what are voluntary bodies and we thought that that might somewhat minimise what we were trying to gain by the passage of this legislation. 
A couple of other minor technical amendments ensure the overall efficacy of the bill and ensure there is a greater consistency of approach across other pieces of legislation.