Over recent years, regulators have become increasingly aggressive in pursuing
investigations and prosecutions against companies, directors and employees.
Bell Gully has unmatched experience and skills to help our clients to respond
to regulatory action, to resolve issues promptly where appropriate, and to
defend court action all the way to trial where necessary.
The new regulatory environment
The increased regulatory activity is, in part, a consequence of corporate
failures following the global financial crisis. But it also reflects a changing
mood. The attitude of the general public, the media, politicians and even the
courts has undoubtedly shifted in favour of regulatory action against those
involved in actual or perceived corporate wrongdoing.
There are many influences on this new regulatory environment:
The reach of the criminal law has been extended to cover areas of corporate
activity not previously regarded as criminal. We see this, for example, with
changes to the law on insider trading and pending criminalisation of cartel
activity and some directors' duties.
The growth of "quasi-criminal" sanctions in which the courts can impose very
substantial pecuniary penalties based on a civil standard of proof.
The imposition of personal liability on directors and executives. An example
of this is the law relating to continuous disclosure by listed companies which
now allows for penalties to be imposed on a company's directors or
Restrictions on company indemnities for directors and executives.
The development of "whistleblower" regimes which encourage and reward
reporting of corporate wrongdoing. These have been particularly prominent in the
reporting of cartel activity.
A continuing trend for Parliament to confer on regulators ever greater powers
to search, seize and interrogate those involved in business. Corporate
regulators are now armed with investigative powers far more powerful than those
conferred on the Police.
The perception of a regulator-friendly judicial climate. Although individual
cases are of course decided on their own facts, at a broader level judicial
attitudes tend to fluctuate over time and the pendulum is generally perceived to
have swung firmly in the pro-regulator direction.
Increased resourcing of regulatory authorities.
Emboldened by all these influences, a far more self-assured and aggressive
approach by the regulators to the use of their statutory powers and a new
enthusiasm to bring civil and criminal enforcement action.
All of this creates increased risk for those in business. A regulatory
inquiry or prosecution has the potential to be costly and to result in
substantial penalties or fines, to distract management from more important
tasks, and to inflict lasting reputational harm.
How we help clients to respond
When facing a regulatory inquiry our clients generally seek to avoid
litigation if possible, to resolve litigation promptly and at minimal cost if it
does arise, and to win the case if it goes to trial.
This is where Bell Gully's unmatched experience and track-record makes the
difference. Our experience means that we know the regulators well, and that they
know us. They know we are willing to work constructively with them to resolve
issues when possible, but also that we will be fully prepared to defend court
action all the way to trial.
We understand that responding to a regulatory investigation or court
proceeding requires a different approach from normal civil litigation. We work
with our clients to develop a strategy suited to the particular regulator and to
the client's particular situation. We have the expertise and judgement to advise
which matters should be resolved out of court and which should be fought and
We also understand that a regulatory investigation or court action often
raises challenges beyond simply dealing with the regulator. These include public
relations, insurance, employment issues, financial reporting and market
disclosure, and the increasing risk of follow-on civil and class actions. Our
experience allows us to anticipate at the outset the issues likely to arise and
to work with our clients and their other advisers to develop a co-ordinated
strategy to achieve a successful outcome on all fronts.
We have acted for companies, directors and other individuals in dealing with
investigations conducted by all the major regulators in New Zealand. In many
cases we have been able to convince regulators that proceedings are not
warranted and matters have been closed without further action being taken. In
other cases, we have helped our clients to negotiate settlements out of court.
When proceedings have been brought, we have successfully defended clients at
trial and on appeal.
Our experience includes cartel defence work, FMA/Securities Commission
inquiries and court proceedings, insider trading cases, civil and criminal
proceedings under the Fair Trading Act, continuous disclosure investigations and
court proceedings, financial reporting inquiries and criminal prosecution,
prospectus liability inquiries and proceedings, takeover disputes and hearings,
Serious Fraud Office (SFO) investigations, employee fraud, and acting in
investigations and disciplinary proceedings carried out by professional
associations such as the Law Society and NZICA.
Bell Gully regularly advises and represents clients in investigations carried
out by all the key New Zealand regulators. We advise on every step in the
process, from how best to respond to a simple request for information through to
a full-blown investigation.
It is always preferable to resolve a matter at the investigation stage if
possible. Rather than simply going through the motions of reacting to an
investigation, we work with our clients to develop a strategy focused on
achieving a prompt and successful outcome. We will also ensure that the
regulators act fairly and lawfully and, where necessary, will challenge any
abuse of regulatory powers.
FMA investigations: Bell Gully has acted for clients in
various inquiries conducted by the FMA and its predecessor, the Securities
Commission. These have included inquiries into prospectuses, Trust Deed
compliance, insider trading, continuous disclosure and financial reporting.
Commerce Commission: We regularly act in investigations
conducted by the Commerce Commission under the Commerce Act, Fair Trading Act
Takeovers Panel: We have acted for companies and individuals
appearing before the Takeovers Panel for alleged breaches of the Takeover
NZX inquiries: We have acted for listed companies and for
NZX members (brokers) in inquiries and disciplinary proceedings carried out by
Overseas Investment office: We represent clients in
investigations conducted by the Overseas Investment Office into alleged breaches
of the Overseas Investment Act.
Serious Fraud: We have acted for clients in SFO
Industry specific regulators including the Electricity Authority
& Gas Industry Company: We act for companies in investigations
alleging breaches of the industry specific codes.
Litigation and trials
Bell Gully's litigation practice is the largest of any New Zealand law firm
and is widely acknowledged as the strongest. Our team of experts covers the full
range of commercial and regulatory expertise, and our practice deals with
complex and contentious commercial disputes in all areas. Our team of more than
50 barristers and solicitors regularly appear before courts and tribunals at all
levels and we are involved in a significant proportion of the major commercial
litigation conducted in New Zealand.
Feltex directors: Bell Gully acted for the five former
directors of Feltex Carpets in their successful defence of criminal charges
brought under the Financial Reporting Act. We are currently acting of the former
directors of Feltex Carpets in defending an ongoing prospectus liability claim
brought by a group of investors. This is the largest prospectus liability claim
ever brought in New Zealand.
Carter Holt Harvey: We acted for Carter Holt in defending
proceedings brought by the Commerce Commission alleged breaches of the Fair
Trading Act in the supply of timber products.
Bluestone: Defending and successfully settling High Court
proceedings brought by the Commerce Commission under the CCCFA alleging unlawful
Tranz Rail insider trading: We acted for Midavia Rail and
David Richwhite in proceedings brought by the Securities Commission alleging
breaches of the insider trading rules in relation to the sale of shares in Tranz
Bank – credit card fee prosecution: We acted for a major
Bank in a prosecution by the Commerce Commission under the Fair Trading Act in
relation to the disclosure of credit card fees on overseas purchases and an
associated High Court civil claim for compensation.
Nuplex: We acted for Nuplex Industries Ltd in defending
civil proceedings brought by the Securities Commission alleging breach of the
continuous disclosure rules.
Cartel / price-fixing cases
We have particular experience in acting in the defence of alleged cartels
both at the investigation stage and in court proceedings.
Air New Zealand and Singapore Airlines Cargo: Acting for
both these airlines (separately) in High Court proceedings brought by the
Commerce Commission under the Commerce Act seeking pecuniary penalties for
alleged cartel conduct in the air cargo sector.
Osmose New Zealand and Australia: We advised the
multinational wood preservative company in a long-running Commerce Commission
investigation and court proceedings seeking penalties under the Commerce Act
against a number of corporate and individual defendants.
Bank – credit card price fixing case: Advising and
representing a major Bank in proceedings bought by the Commerce Commission
against all the major banks, Visa and MasterCard concerning alleged price-fixing
of multilateral interchange fees and an associated civil damages proceeding
brought by affected retailers.
Leniency applicants: We have acted for clients who have
applied for and obtained leniency for cartel conduct before the Commerce
Investigations by professional bodies
We have experience representing clients in investigations carried out by
professional bodies including the Law Society and NZICA
Compliance programmes & internal investigations
We have assisted many clients develop compliance programmes to help to
prevent trouble in advance. Our compliance programmes range from a full review
of existing practices and running of training workshops to one off training on
specific issues, e.g. trade practices.
We have also helped companies run
internal audits and investigations including in cases of suspected employee
fraud and misconduct. We have helped clients to conduct investigations in
compliance with employment law obligations and, when appropriate, we have worked
with clients to liaise with regulatory bodies and the Police.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.