Regulatory investigations & prosecutions

Wednesday 12 June 2013

Authors: David Cooper and Jenny Stevens

​Over recent years, regulators ha​​ve 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 management.

  • 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 won.

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.

Our experience

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 and CCCFA.

  • Takeovers Panel: We have acted for companies and individuals appearing before the Takeovers Panel for alleged breaches of the Takeover Code.

  • NZX inquiries: We have acted for listed companies and for NZX members (brokers) in inquiries and disciplinary proceedings carried out by NZX.

  • 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 investigations.

  • 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 credit fees.

  • 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 Rail.

  • 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 Commission.

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.

For more information
  • Jenny Stevens

    Partner Wellington
  • Simon Ladd

    Partner Auckland
Related areas of expertise
  • Litigation and dispute resolution
  • Regulatory investigations and prosecutions