Connell Brian: Securities Legislation Bill — In Committee 
Connell Brian: Securities Legislation Bill — In Committee 
[Volume:634;Page:5474] 
BRIAN CONNELL (National—Rakaia) 
: 
 I start by thanking the Minister in the chair Lianne Dalziel for her willingness to get to her feet to clarify questions that have been put to her. 
Simon Power 
: She’s good like that. 
BRIAN CONNELL 
: She is proving to be very good like that this evening. I also say to the Minister as regards my argument around the Supplementary Order Papers that it was not the substance of the Supplementary Order Papers I was concerned about but rather the timing with which they were tabled. I was concerned that without having the opportunity to read those Supplementary Order Papers in detail it was hard to make a significant contribution to the debate. Now that I have had the opportunity to read them I agree with the Minister that they are warranted. I accept they have come from financial markets and institutions and that is quite legitimate. My point is just around timing. 
The other issue the Minister responded to was my question around insider trading and the concept of an insider being expanded to include any person who has inside information regardless of its origins. That is why I went to some trouble to give the example I did; it was to do with the origins of that information. The bill still states that insider liability has been expanded to any person who has inside information regardless of its origins. 
I now go to another component of the bill. In my discussions with submitters to the Commerce Committee I found that they still have some concern with new section 4 to be inserted in the Securities Markets Act by clause 20. They say that section 4(1)(a)(ii) which will prevent those with insider information from trading until a reasonable period has passed for it to be disseminated is inconsistent with section 4(1)(b) and that the matter will probably be left to the courts to distinguish. The problem has occurred in Australian legislation on which this provision is based. 
I say to the Minister with the best will in the world that I think this is a flaw in the drafting of the legislation. If submitters to the select committee still feel in subsequent discussions that this issue is left open to interpretation then I think that is a problem. Now that we are going through the Committee stage and trying to draft legislation I think we should try to get it as right as we possibly can. So I leave that issue with the Minister and ask whether she would be good enough to talk to her advisers and maybe come back to the debate with some response. If she could give me some satisfaction that that issue has been clarified I would be grateful. 
The other area that concerns me is that when preparing a takeover involving third-party consultants there is no defence provided to those consultants for the inside information they obtain through due diligence. It is standard practice in any takeover or acquisition to involve a due diligence team and how inside information is treated in that situation is an issue for debate. Again I seek the Minister’s indulgence and ask her to speak to her officials and to give the Committee some satisfaction that that issue has been canvassed as well. 
We should comment on the issue of additional disclosure for advisers and brokers as well. Those offering investment advice are now required to disclose qualifications experience professional standing criminal convictions and most important any relationship that would influence their advice. It is my view that most advisers do that now. What this legislation will not do though is protect the unwitting public from those people who are crooks or who have a criminal intention. Having as advisers people who are well-trained or well-qualified but who do not have good intent will not protect the investing public. That issue still concerns me. 
I can see that compliance costs will have to be built into investment companies because people will have to get qualifications where generally I think quality advice is being given now and there have been no incidents where those particular organisations have given bad advice. So I think the Minister should look at this issue.