How to stay on the right side of insider trading law

Auckland businessman Mark Stephen Talbot has pleaded guilty to a representative charge under the Securities Markets Act 1988.

Trezise And Glenie

While the plea related to his failure to disclose a relevant interest (sections 19T and 19ZD of the Act), Talbot also made a series of admissions in relation to insider trading.

After the Financial Markets Authority’s (FMA) insider trading retrial of former eRoad manager Hamish Sansom last year, and the 2017 conviction of Jeffrey Honey, listed companies (and their advisers) should now be under no illusions about the importance of ensuring their employees’ understanding of the relevant law is up to date.


Talbot, a former partner at Deloitte New Zealand, was the virtual CFO of VMob Ltd. VMob (later renamed Plexure) is a technology development company and a listed issuer.

Talbot was also the director and a shareholder of Blumau Finance Ltd, a private investment company.

In 2014, VMob entered into negotiations with McDonald’s Japan to provide an app-based platform for its loyalty program. The contract was expected to generate a profit of $4.8 million over three years.

The previous year VMob had generated total revenue of $385,000 so the contract was a serious catch. Involvement in such a project was also expected to substantially increase the credibility and value of VMob’s brand overall.

Talbot’s role within the company meant he was well aware of the progress and significance of the negotiations. On 23 July 2014, McDonald’s advised VMob it would be awarded the contract. Later that same day, VMob’s COO conveyed the news to the other company directors and officers, including Talbot. The next day Talbot, through Blumau, purchased one million VMob shares.

The contract was formally confirmed on 7 August 2014. VMob announced it to the market on 11 August 2014.

After an FMA investigation, Talbot was charged with one count of insider trading and eight of failing to disclose a relevant interest.

By way of explanation, Talbot stated the shares had been purchased for the benefit of his father. In the absence of a personal benefit, he had not considered his knowledge of the impending McDonald’s deal impacted upon his ability to make the trade.


Talbot ultimately entered a guilty plea to one representative charge for failure to disclose a relevant interest. He was required to pay a penalty to the FMA of $150,000 and has undertaken not to be a director, promotor or manager of a listed issuer for five years.

While the charge of insider trading appears to have been withdrawn by the FMA during the resolution process, Talbot nonetheless admitted a contravention of the Act’s insider trading provision as part of his undertaking. He also accepted it was no defence that the shares were held for the benefit of his father.


There was no suggestion that VMob had been involved in Talbot’s offending or had otherwise contravened the Act.

To the contrary, it appears to have had sound procedures in place in an attempt to prevent insider trading.

As a listed entity, it had a trading policy that applied to all staff and contractors. It also had several officers responsible for ensuring new employees and contractors were aware of the application of that policy (though, unfortunately, one of those officers was Talbot himself).

Where an employee breaches insider trading laws, a proportion of the burden will fall on even an entirely blameless company.

It will need to spend time and money engaging with the regulator during its investigation. It will need to produce documents and records, and consider the best means of preserving their confidentiality (particularly when some may ultimately be produced during court proceedings). It must also endure being associated with the employee’s breach in media coverage of any prosecution, which may continue for months, even years.

To reduce, as much as possible, the risk of insider trading by an employee or contractor, it would be sensible for issuers to take the following steps:

  • Ensure the company has an internal trading policy which aligns with the law. When a new case is decided, take the opportunity to review the policy to ensure it continues to reflect the current position.
  • Ensure all staff are trained in the policy, the reasons behind it, and the ramifications if it and/or the law is breached.
  • Use the publicity which tends to surround insider trading cases as a prompt for refresher training. Be aware there may be a need to correct misperceptions of the law which have been encouraged by over-simplified media reporting. For example, last year’s retrial of Hamish Sansom was heavily – but not always accurately – reported. If media coverage has left room for misunderstanding of the law, this should be actively addressed.

It is also important to ensure successive rounds of updates and refreshers do not obscure what should fundamentally be a straightforward concept. Whether under the previous Act or the current, an information insider must not trade. It’s as easy as that.

Joanna Trezise and Andy Glenie are Auckland-based litigators specialising in competition and regulatory law. They can be reached at and 

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