Eroad insider trader sentenced

Yesterday, Mr Honey was sentenced in the Auckland District Court to six months’ home detention for insider trading.

In April 2017, Mr Honey, an employee at Eroad (a transport technology company listed on the NZX) pleaded guilty to one charge of disclosing inside information or advising/encouraging insider trading, contrary to Part 5 of the Financial Markets Conduct Act 2013 (FMCA), see our earlier news alert here.

The charges related to the disclosure by Mr Honey of confidential information regarding Eroad’s performance via text message to a former Eroad employee who then traded 15,000 Eroad shares on that information. The FMA has also filed one charge of insider trading against the former Eroad employee who engaged in the trading.  He is yet to appear before the Court.

As at the time this Alert was issued, the District Court sentencing notes were not available. However, we will update the Alert if they do become available.

Our view

The sentence of six months home detention shows the seriousness with which the FMA and the courts regard deliberate breaches of the FMCA.

FMA’s General Counsel, Nick Kynoch said:

Insider trading erodes confidence and harms the integrity of our markets. Where we find examples of this kind of misconduct we will take action and use our enforcement powers to uphold the law.

This shows that the FMA continues to be active in enforcement in relation to market conduct, in particular under Part 5 of the FMCA which deals with insider trading, market manipulation and continuous disclosure.

We recommend all listed issuers and other capital markets participants refresh their understanding of Part 5 of the FMCA.

If you have any questions in relation to insider trading or other issues relating to market conduct, please contact one of our experts.

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