Eroad staff in FMA insider trading charges

The Financial Markets Authority has filed insider trading charges against a current and a former employee of Eroad.

The FMA alleges the current Eroad employee sent text messages to the former employee containing confidential material information relating to Eroad’s performance in the period to 30 September 2015.  The former employee then traded 15,000 Eroad shares. 

FMA general counsel Nick Kynoch said: “The integrity of NZ capital markets is a strategic priority for the FMA. Trading misconduct, such as insider trading, negatively impacts the integrity and reputation of our markets, and the confidence of people investing in them.”

Eroad, which markets technology for electronic monitoring of vehicle fleets, says it has suspended the employee charged by the FMA.

Chairman Michael Bushby said the company supported and endorsed the FMA’s commitment to the integrity of the capital markets.

“Irrespective of the FMA action, we are taking appropriate disciplinary action regarding the alleged sharing of confidential financial information for personal share trading,” he said.

“We accord the security of our company information the highest priority.”

Mr Bushby said the company was considering civil claims against both individuals charged.

“The information relating to this matter concerns Eroad historic financial information allegedly used for personal share trading,” he said.

“As a listed company we take our responsibilities very seriously and ensure that all our team has training and information to understand their obligations, the importance and consequences of insider trading laws and our own responsibilities.”

He said the company was confident no data about its staff, suppliers, customers or stakeholders had been compromised.

The investigation and charges followed a referral from the NZX in November 2015.

The charges were filed in the Auckland District Court and relate to alleged breaches of the Financial Markets Conduct Act sections 241 and 242.

The FMA said the prohibition against insider trading “is one of the key mechanisms for ensuring that markets remain fair and transparent.

The FMCA prevents people who hold material information that has not been made generally available to the market (inside information) from disclosing that information or trading on it. Material information is information that a reasonable person would expect, if it were generally available to the market, to have a material effect on the price of shares in the listed issuer.”
It said Eroad’s conduct is not part of the FMA’s investigation and Eroad has not been charged with any offence.  “Eroad has fully co-operated with and assisted the FMA throughout its investigation into these matters.”

The FMA also filed charges against one of the individuals alleging obstruction of its information gathering powers.