Securities Commission 'did its job'

Securities Commission chairman Jane Diplock labelled as a "myth" suggestions the commission could have done more to limit the damage done by finance company collapses.

New Zealand Business Roundtable chairman Roger Partridge told Parliament's commerce select committee the Securities Commission had "nodded off".

Today he told Radio New Zealand the Securities Commission had a hard job to do and a wide range of powers.

"During the period when finance companies were borrowing billions of dollars, my view is that they didn't dig deep enough when they were looking at finance company disclosure. They had the powers to intervene and could have done a better job," Mr Partridge, who is also chairman of law firm Bell Gully, said.

"Our regulatory powers have been quite fragmented, so we've had a range of bodies - the Securities Commission, the stock exchange, the Government Actuary, the Ministry of Economic Development, the Registrar of Companies - all exercising some powers."

The move to bring all those regulatory powers together under the Financial Markets Authority super-regulator was a good one, Mr Partridge said.

Last week Institute of Directors president Kerry McDonald said regulators had been slow to respond, and should have looked at charging companies at an early stage.

Ms Diplock said the Securities Commission had done the job it was able to do under the Securities Act.

Under the structure, the commission's role had been to investigate what happened.

"When the prospectuses were out in the market and it appeared those companies were running successfully and investors were getting their returns, we had no trigger to go in and investigate," Ms Diplock said.

"Now I don't think the Business Roundtable or anyone would want the regulator to be able to walk into a well-managed company and just decide on a whim, or a rumour, to do an investigation."

Many of the prospectuses had been extremely well drafted.

"They were drafted by the best lawyers in this country," Ms Diplock said.

"So, it's impossible to tell before someone doesn't keep their promise that they're not going to keep their promise."

The Institute of Directors should look at the role played by directors in the company collapses.

"Fundamentally, it's the directors who failed here. The directors who misled the public in their advertisements and their prospectuses," Ms Diplock said.

"There's a myth out there that it wasn't the directors, it was the regulators, and it's just wrong and it needs to be busted."

Ms Diplock also noted there had been a failure of the regulatory structures, and lessons had been learned from that. She pointed out that some well-managed companies had failed for other reasons.

- NZPA