Foss Craig: Securities Legislation Bill — In Committee 
Foss Craig: Securities Legislation Bill — In Committee 
[Volume:634;Page:5470] 
CRAIG FOSS (National—Tukituki) 
: 
 I thank the Minister for clarifying those matters and I endorse the goodwill that seems to be around this Securities Legislation Bill here and in the Commerce Committee even though it was over quite some time. National is supporting this bill. It was interesting to pick up on the point that Mr Brian Connell made about the two Supplementary Order Papers. Last time I spoke to a bill like this—the KiwiSaver Bill 2 weeks ago—a couple of key Supplementary Order Papers were launched in the Committee. The democratic process was somewhat abused in my opinion in that fundamental changes were introduced to a bill at the last minute. Having said that I freely admit that the changes in these Supplementary Order Papers are not quite as fundamental. 
I would like to declare a personal interest as we speak about some of the insider-trading matters not that I have insider traded but I have traded securities in New Zealand Singapore London Australia Tokyo New York Hong Kong and also most interestingly as far as insider-trading stuff goes in the emerging markets when the Soviet Union broke up and particularly also with South America and the Indonesian states. If we think we have a need for this legislation in New Zealand my goodness gracious once one gets involved in some of those markets with their various versions of insider trading “bauble” exchange if you like cash for favours and cash for questions it is endless. I make that point because in all those countries they of course did have securities legislation. The key is the teeth and the appetite to enforce the legislation or the punishments and enforcing the boundaries that surround it. 
My colleague Mr Chris Auchinvole the next West Coast MP made some very good points. In fact it is interesting; why do we need this legislation? Sadly yes there was a time when one’s handshake was one’s bond and that was one’s pledge. For example the pledge card could be an interesting example of why we need such legislation or proactively in the internationalisation of share markets securities and financial markets we need robust legislation ongoing and work-in-progress legislation if you like to keep us in tune with the rest of the world. 
I would make one more point—whatever gets passed in the Chamber sadly we will have examples again of dodgy behaviour shareholders being ripped off and investors being ripped off by unscrupulous individuals. I guess we will have some further legislation once that arrives. In particular the arrival of the Internet and the ability to share trade in unregulated environments—particularly in some of the emerging Asian countries with all that goes on there—has created ripe opportunity for further abuse sadly of people’s goodwill. There are a few recent examples. Some are currently in the headlines. We have an issue around the recent fall in the Feltex share price and the issues around the Feltex company when it was floated versus where the share price is now and who knew what and was it just the market or did some people know more than others and did they let on more than others? Did they deal within the law or the spirit of the law or the word of the law? 
 Interestingly another example where there was very very robust legislation was around the Enron debacle in the United States a few years ago. I am sure members remember that that debacle brought down the great accounting company Arthur Andersen and Co. Again the United States had more robust legislation probably than New Zealand will ever have yet again unscrupulous individuals managed to exploit the system tunnel right in and sadly the auditing sector of the market was never the same again. 
We recently had an interesting example in New Zealand over the allegations around Telecom and the leaking of insider information in respect of what the Government proposed to do with the unbundling. Regardless of the merits of that we saw quite openly the impact someone can have if that person has a key piece of information and is about to short-sell into a market. From memory that leak wiped about $2.5 billion off the market value of Telecom which was—and probably still is—New Zealand’s largest telecommunications company. Thank you Mr Chairman.