Call for independent watchdog staff

Nuplex says it will defend itself against Securities Commission allegations that it breached continuous disclosure obligations.

NZX chief Mark Weldon says the resignation of Securities Commission director David Jackson highlights the need for a market regulator made up of fulltime, independent staff.

David Jackson resigned from the Securities Commission on Tuesday night, as the regulatory body announced it was bringing civil proceedings against Nuplex, a company in which he is a non-executive director.

The proceedings are against Nuplex and six current and former directors, including Jackson, for allegedly breaching continuous disclosure obligations.

Weldon said there were flaws in the Securities Commission being "governed and quasi-operated by 12 part-timers who are market generalists, company directors and accountants".

"A commission that is effectively and frequently enforcing will inevitably, at some point in time, be looking to investigate and possibly enforce against organisations with which its commissioners are directly or indirectly associated.

"I don't think it sends the right signals to other countries. The United States, Australia, UK and other European countries - I could go on - do not organise their capital markets regulators like this."

He said market regulatory bodies in those countries had a smaller number of full-time, independent staff.

Shareholders Association chairman Bruce Sheppard said Jackson should have resigned from the commission much earlier than this week.

He said: "Could anyone even think that [Jackson] didn't know about this investigation as it progressed?"

Securities Commission chairman Jane Diplock would not comment on how long Jackson had known about the case being brought against Nuplex, but said the commission went to great lengths to withhold the identity of a company if a member was professionally involved with that organisation.

She said the single regulatory body recommended by the Capital Markets Taskforce this year would be most effective if it used part-time members, who brought an immense set of skills and experience to the job.

Sheppard believed the commission's decision to prosecute Nuplex and its directors would only result in its investors getting poorer.

"What will happen is Nuplex and its directors will defend their position and that will incur legal fees to do that, and the shareholders will be paying those fees because they'll be met from company resources," he said.

Sheppard sent an email to Diplock yesterday in which he stated he was "impressed and perplexed" by the "sudden rush of prosecutions".

"Could it be that you see an end to your existence and are trying to demonstrate your right to live in the brave new world recommended by the Capital Markets Taskforce?" he asked.

Asked whether the commission was making an example of Nuplex, Sheppard said: "I think they are playing their own game."

NUPLEX

* Global resins manufacturer. Products used in paper, construction, marine, paint and adhesive industries.
* Founded in Auckland in 1952.
* Has manufacturing, research and development locations across Australasia, Europe, Asia and North America.
* In February reported a record net profit of $34.6 million for the final six months of last year.

THE PROCEEEDINGS

* The current and former Nuplex directors named in the proceedings are:
* Sydney-based managing director John Hirst.
* Chairman and non-executive director Robert Aitken.
* Non-executive director Barbara Gibson.
* Former non-executive director Bryan Kensington.
* Non executive director Michael Wynter.
* Non-executive director David Jackson.