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Insider trading alleged in CBL class action

Tim Hunter: NBR. 1 November 2019


Claim filed at High Court yesterday.


An allegation of insider trading by CBL directors Peter Harris and Alistair Hutchison is included in a class action claim filed at Wellington High Court yesterday.


The legal action follows the collapse of CBL in February last year triggering losses for shareholders of $747 million.


CBL’s largest institutional shareholders, Harbour Asset Management and Argo Investments, are leading the class action, which is funded by litigation funder LPF Group.


Harbour managing director Andrew Bascand, chair of the class action claim committee, said CBL directors should be held to account for their actions and shareholders compensated for their losses.


“We believe legal action is the only way investors in CBL can get any money back,” he said.

Bascand said the claim alleges the directors of CBL were responsible for misleading statements in its 2015 initial public offer documents that, at the time the company listed on the NZX and ASX, it had adequate financial reserves to meet its insurance obligations.


“The claim also alleges that directors are responsible for the company failing to update the market in the period after the IPO with material information about CBL’s financial position,” he said.


“The insider trading allegations in the statement of claim allege that directors Peter Harris and Alistair Hutchinson, through companies controlled by them, sold shares in CBL while they were in possession of material information relating to CBL that they knew was not available to the market generally.” 


CBL listed on the NZX in October 2015 after an IPO raising $90m from the sale of new shares and $35.3m from the sale of shares by Harris and Hutchison.


In April 2017 Harris and Hutchison sold a further $16.3m and $17.6m of shares respectively at $3.26 a share.


When the company’s shares were suspended from trading on the NZX they were valued at $3.17.


A second class action, targeting only CBL Corp, is being prepared by law firm Glaister Ennor with funding from ASX-listed IMF Bentham.


Shareholders were invited to sign up for the action by yesterday evening.


IMF investment manager Ewen McNee said the action was due to be filed this month but declined to indicate how many shareholders had signed up or who would be the lead plaintiff.


“We are pleased with the response from retail and institutional investors,” he said.


Click here to read the original article and other related articles about the CBL collapse https://www.nbr.co.nz/story/insider-trading-alleged-cbl-class-action

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