KEY POINTS:
The NZX says it is pleased with a sentence sending Peter Marshall, former managing director of Access Brokerage, to jail for three years for fraud.
Rowan Macrae, head of communications at NZX, said yesterday that anyone engaging in fraudulent behaviour should take a lesson from the sentence that
had been handed down to Marshall.
"We are happy that the responsibility for what happened at Access Brokerage has been firmly allocated where it should lie, which is with the then-managing director who committed fraud."
She said NZX now ran a "very, very strict reporting regime" and was sent daily and monthly updates of brokers.
The last time Access Brokerage was inspected it was by a third party, but now all broker inspection was done in-house by trained NZX staff.
"The key point to make is that Marshall actually committed fraud so obviously he was subject to Serious Fraud Office investigation which is a whole other level."
Marshall, 62, a sickness beneficiary from Upper Hutt, was responsible for Access Brokerage when it collapsed, owing $3.9 million in client accounts in September 2004.
He pleaded not guilty to 14 Serious Fraud Office charges of false accounting with the intent to defraud, and making false statements with the intent to defraud between August 2001 and July 2004.
A jury of 11 in the Wellington District Court last month found him guilty on all 14 counts.
Marshall had been free on bail until yesterday's sentencing.
Access Brokerage was registered in 1986 and Marshall became CEO in 2001.
Crown prosecutor Kristy McDonald, QC, told the trial the NZX identified a "very significant" cash shortfall and the company was placed in liquidation.
Former Access employees told the court they had detected shortfalls in client funds years before the firm collapsed.
Former employee Linda Hassell said there were several instances of shortfalls in the company's expense account, at one point up to $1 million.
Another employee, Valerie Wenk, told of a number of times when transfers were made from the trust account where clients' funds were held to the firm's expense account to cover expenses.
She spent a lot of time trying to fix discrepancies. At one point she was aware of a shortfall of $3.5 million.
SFO forensic accountant David Osborn told the court false entries in Access' financial journals were used to show the company as solvent, then also used to report to the NZX that the firm could meet its obligations to clients.
A 2005 Securities Commission report found that NZX's broker compliance regime suffered from inexperience, inadequate training and poor understanding of relevant rules during the period leading up to Access' collapse.
The Bank of New Zealand, which jointly underwrote the shortfall in funds with NZX, is seeking to recover its $4.8 million losses from the market operator and regulator and from auditors Deloittes.
The BNZ and liquidator Korda Mentha, which is also taking action to recover $400,000 in costs from the market operator and auditor Deloitte, say the two firms' inspections of Access' books should have raised concerns long before the online sharetrader went belly up.
In February the Court of Appeal overturned a 2006 High Court decision which prevented BNZ from taking action, but NZX is seeking leave to take the matter to the Supreme Court.
- NZPA