JBWere inquiry raises questions

By ELLEN READ markets writer

Did someone at the Stock Exchange clear JBWere to carry out its controversial July 4 purchase of Rubicon shares?

This would explain the curious outcome of the exchange's investigation into the broker's deal on behalf of Guinness Peat Group.

With the exchange refusing to identify the information which led it to clear JBWere - despite the firm making a $50,000 contribution to a rules revamp - the prior-approval theory is widespread.

Industry players canvassed by the Business Herald said the exchange's investigation was rushed and its outcome a little unusual. It fits with JBWere believing it had received exchange approval for the deal but this later being subject to internal exchange debate.

But there is also no good explanation for JBWere agreeing to a $50,000 payment if it could prove it had advance approval, except perhaps as a goodwill gesture and to prevent exchange boss Mark Weldon or the exchange looking weak with its first disciplinary action since his arrival.

Weldon had little to say yesterday, citing a confidentiality agreement with JBWere.

He declined to say whether JBWere had received advice from the exchange before the deal, or what the "previously undisclosed information" was which led to JBWere being cleared of improper behaviour.

Weldon did say he was trying to get the brokers to be in closer touch with the exchange and admitted there were some blurred lines of responsibility around that process.

He said the current revamp of the exchange's regulations and members' rules was an attempt to clarify procedures and behaviour.

JBWere chief executive Clark Perkins was not available yesterday and others at the firm would not comment.

Last month, JBWere agreed to pay $50,000 towards redrafting Stock Exchange rules after an exchange investigation into its role in GPG's purchase of Rubicon shares.

On July 4, GPG spent $37.7 million buying 19.87 per cent of the forestry and biotech company after the market closed.

The deal was done by JBWere and rival brokers complained that the firm broke exchange rules by not placing at least 20 per cent of the deal on market.

Explaining the subsequent investigation outcome, Weldon said then that the exchange had obtained previously undisclosed information about why JBWere was satisfied it was acting in accordance with Rule 8, which requires "good stockbroking practice".

He would not identify the nature of that information, but said the NZSE would redraft its rules regarding stands in the market and issue a policy statement on the procedures to be followed when interpretation of rules or regulations was required.