A minister who gave an interview on Telecom's future did not base his comments on inside information, the Securities Commission said today.
However, it said ministers and others who the sharemarket may presume to have confidential information should "exercise caution" when commenting on issues which could affect companies.
Communications MinisterDavid Cunliffe gave an interview to financial news agency Bloomberg on May 15 in which he was quoted as saying Telecom may have to cut dividends to fund increased investment.
The comments were blamed for knocking a further two per cent off Telecom's already battered share price following the Government's May 3 announcement that it was opening access to the telephone and broadband network.
The total losses during that fortnight were around $2.7 billion.
The Commission also ruled today that there was no evidence of insider trading over the leaked plan to open access to the network.
But it said the company and the Government could have done more to prevent any illegal trading taking place after the release of the information.
The commission said the May 3 announcement, which was due to be made in the Budget but had to be brought forward following a leak of Cabinet papers to Telecom, did create an "avoidable asymmetry of information".
This allowed 30 minutes of trading in Telecom shares on the Australian exchange after the announcement, which the company and Government could have prevented.
The Commission said the Government should take steps to avoid this happening again.
The Commission's division chairman Lloyd Kavanagh said the Government should work with the NZ stock exchange to develop ways the Government can disclose information that could be price-sensitive, "while accommodating the Government's other legitimate concerns".
He added: "The Commission considers that integrity and efficiency of the markets are best served through a well informed market with a high standard of disclosure, and when investors have equal access to material information, so that they can trade on the same information at the same time."
