New Zealand’s High Court has ordered CBL Group’s former finance head Carden Mulholland to pay more than $NZ1.2 million ($1.1 million) in penalties and legal costs following continuous disclosure breaches.

The matter marked the first time New Zealand courts had considered the liability of a CFO acting as an accessory to a company’s contravention of financial markets conduct laws.

“Investors were denied timely access to material information and continued to trade, uninformed, for an extended period of more than five months,” Justice Ian Gault said. “The impact on the market was serious and far-reaching.”

The court imposed a $NZ641,250 ($593,961) penalty and ordered he pay costs of $NZ606,216.53 ($561,511).

A judgment earlier this year found Mr Mulholland had the required level of knowledge and participation in three of the company’s continuous disclosure contraventions to make him personally liable as an accessory. The penalty decision was delivered last Wednesday.

Financial Markets Authority head of enforcement Margot Gatland says the decision and penalty set an important precedent for holding a CFO accountable.

“The FMA will continue to take action when we see this type of misconduct damaging the trust and confidence in New Zealand’s financial markets and businesses,” she said.

Disclosure breaches included the existence and impact of about $NZ35 million ($32 million) in premiums owed but not received. The issue was known by August 24 2017 but not disclosed to the market until February 5 2018. 

The need for CBL Insurance to strengthen reserves by about $NZ100 million ($93 million) was known by January 25 2018 but not disclosed until February 5 2018 and a regulatory direction in Ireland requiring additional cash reserves of €31.5 million ($56.4 million) was known by January 30 2018 at the latest but not disclosed until February 7 2018.

The FMA reached settlements with CBL MD Peter Harris and four former independent non-executive directors in 2023 and last year. They each admitted seven contraventions and the court ordered penalties totalling $NZ11.8 million ($10.9 million).

A related proceeding around the company’s initial public offering is scheduled for a six-week trial in Auckland starting on April 13 next year.

CBL listed on the NZX Main Board in 2015 and entered voluntary administration in February 2018. 

Wednesday’s decision can be seen here.