The Financial Markets Authority (FMA) has filed high court proceedings against the chief executive of an NZX-listed company for alleged market manipulation.
Photo: RNZ / Rebekah Parsons-King
The Authority is claiming that New Talisman Gold Mines chief executive Matthew Hill made anonymous posts in the online investor forum Sharetrader over seven years, without disclosing his involvement in the firm.
FMA head of enforcement, Karen Chang, said market manipulation undermined confidence in financial markets.
"We considered Mr Hill's conduct warranted a strong response to demonstrate that such actions will not be tolerated, and to maintain confidence in New Zealand's markets."
The content of the postings was not disclosed. The FMA said New Talisman Gold Mines was not involved in the legal proceedings.
The FMA said Hill made dozens of posts on Sharetrader under two usernames -- "bullish" and "Epithermal" -- but made no disclosure of his connections with the company.
Sharetrader identified Hill as the person posting the messages in July last year.
Chang said the case highlighted the potential for misuse of social media and forums.
"Investors should be careful when using forums to inform their investing decisions as they can be exploited by vested interests."
New Talisman said it was "premature for us to prejudge the outcome".
It said it had previously complained to FMA and the operator of the Sharetrader website about lack of moderation on the website.
"We remain hopeful that FMA will take appropriate action in respect of our complaints. We continue to call for online publishers to be regulated, and proactive regulatory guidance to be issued, on the use of social media by investors, issuers, intermediaries, and other market participants and their employees," chair Charbel Nader said in a statement to the stock exchange.
New Talisman has been working old gold mines in Karangahake, near Waihi, and recently acquired an interest in a prospect in Vanuatu.
Over the past decade its shareprice has ranged between one and three cents a share, and was last trading at one third of a cent (0.003 cents) .
Chang said the legal action was seeking an admission from Hill, a financial penalty, and costs.
Meanwhile he Shareholders Association, a group which represents small retail shareholder interests, said it had been involved with concerned shareholders in the company for some time about Hill's conduct , its governance and performance.
"This has included a representation to New Talisman Mines that NZSA does not support Matthew Hill remaining on the board of the company," Association chief executive Oliver Mander said.