Wealth management firm stung with $300,000 NZX fine

Wealth management firm Pyne Gould Corporation (PGC) has been fined $300,000, plus costs, after breaching NZX listing rules, following a referral by the NZX Regulation and the NZ Markets Disciplinary Tribunal.

The breaches include failure to comply with board composition requirements and the late filing of annual and interim financial information – the latter leading to the company being suspended from trading on October 8 last year.

Trading resuming on June 13 this year, when it submitted its interim report for the full year 2016.

This was PGC’s fourth referral to the tribunal, the second consecutive occurrence of periodic reporting breaches.

In addition, on October 29 last year PGC announced its independent chairman, Bryan Mogridge, had resigned from the board effective immediately. A new independent director, Paul Dudley, was not appointed until May 23 this year.

This was determined to be in breach of NZX main board listing rules, as PGC was without the mandatory number of independent directors for 138 business days. 

This was PGC’s third breach of its corporate governance obligations.

The length of the breach was the longest for a reporting requirement in any matter previously referred to the tribunal.

NZX Regulation determined a referral to the tribunal was the appropriate enforcement outcome given the nature of PGC’s breaches.

NZX Head of Market Supervision Joost van Amelsfort says the NZX considers compliance with periodic reporting, and corporate governance obligations, fundamental to ensuring investor confidence in New Zealand’s capital markets.

“While there were mitigating factors – including PGC’s cooperation during the investigation – the length of the breaches and the fact that these were repeat breaches by PGC, were major contributing factors,” he says.

“NZX Regulation considers this indicative of the level of penalty that will likely be sought in relation to breaches of these fundamental obligations in future.”

PGC’s penalty is significantly higher than previous fines imposed by the tribunal.

Mr van Amelsfort says this reflects, in part, the tribunal’s previously well-signalled intentions to increase penalties, particularly for issuers who have had repeat breaches.

PGC’s breaches fell within penalty band three under the tribunal’s rules and were subject to a potential penalty of up to $500,000. The tribunal’s initial determination was appealed by PGC.