Former Plexure Group virtual chief financial officer Mark Talbot’s guilty plea to breaching disclosure obligations and his admission of insider trading were bottom-lines for the Financial Markets Authority.
Talbot pleaded guilty to a representative charge for a breach of disclosure obligations last month and will pay $150,000 in lieu of a penalty. He’s also agreed to an enforceable undertaking with the FMA banning him from being a director, promoter, or manager of a listed issuer for the next five years.
His family still owns shares Talbot wrongfully bought for his father. However, a 1-for-25 share consolidation has meant that although the value of the stake has doubled to $21,600, a $12,000 fine ordered by the High Court for his breach of disclosure obligations, wiped out the gain before the FMA penalty.
FMA head of enforcement Karen Chang said she never would have simply accepted the $150,000, without the guilty plea on non-disclosure and the public admissions of insider trading.
She said the $150,000 penalty was symbolic and that it doesn’t matter how much or how little the amount of the misconduct, because it ripples through the wider market.
“It’s really important to be vigilant on any kind of behavior like this regardless on the scale,” she said.
The reputational impact of the criminal conviction and public admission were a proportionate censure, she said. That also helped inform the wider market in a way that wouldn’t necessarily be available in a jury trial, because the verdict isn’t supported by a judge’s reasoning.
“We’re careful that this isn’t the cost of doing business and that there are sufficient deterrent outcomes for a person who does take this sort of risk,” Chang said. “I think in this case, and Mr Talbot probably agrees, the consequences have been serious for him.”
He was virtual CFO of Plexure, then known as VMob, between 2011 and 2014. During the time, he bought 1 million shares at 10 cents apiece, or $10,000, knowing that the firm was at the front of the queue for a large contract with McDonald’s in Japan.
The agreement with the FMA shows that after the trade in 2014, he asked the board about whether he could buy shares, and was told he should not.
In the undertakings, Talbot admitted that the trading was against the Securities Markets Act that was in place at the time, and that it wasn’t a defence for him to say he’d bought the shares for his father.
The FMA said Plexure wasn’t part of the investigation and cooperated fully with the regulator throughout.
Talbot said in a statement that he conducted the transaction based on inaccurate and incomplete advice from people he trusted.
With the benefit of hindsight, he said the scope of the role was too great for him and he didn’t have the level of support he was promised.
“The NZX listing rules are an essential part of the capital markets and I suggest anybody who accepts a role in a public company takes adequate care to ensure that they fully understand all the required responsibilities, including the disclosure obligations of relevant interests,” Talbot said.