Key Points:

The Securities Commission was yesterday hailing the $20 million settlement in the country's longest running insider trading case as a success for shareholders who lost money selling Tranz Rail shares in 2002.

Former Tranz Rail director and merchant banker David Richwhite, and his company Midavia Rail Investments, agreed to pay $20 million compensation to the watchdog in what commission chairman Jane Diplock said was Australasia's biggest insider trading settlement.

Neither Richwhite nor Midavia admitted liability. However Diplock said the settlement, the last in a series of six, was a "success".

"It's important to remember it's a civil case. It's not a case about innocence or guilt, there's no question of a criminal aspect.

"It's about compensating the shareholders. So I wouldn't put it in terms of a victory ... it's a good regulatory outcome."

In a statement on behalf of Richwhite and Midavia, Bell Gully lawyer Roger Partridge said the settlement payment was only a little over half the amount claimed by the commission, and less than one-fifth of the commission's maximum claim at the time it started proceedings.

"The fact that the commission was prepared to settle for substantially less than the full claim and without any admission of liability no doubt reflects the commission's recognition that it faced a risk of losing if the claim went to trial," the statement said.

Diplock said she was confident that if the case had gone to trial the commission would have been able to make the allegations stick. But she agreed that the settlement from Richwhite and Midavia was "an offer of such magnitude [that it made] one pause".

She also noted that when weighed against the best interests of the shareholders: "$27.5 million less costs seemed to us a very good outcome".

The commission had earlier reached settlements with four other defendants - former managing director and chief executive officer Michael Beard, former Tranz Rail chief financial officer Mark Bloomer, former Tranz Rail director Carl Ferenbach and private investor Berkshire Fund III, for a total of $7.7 million.

Calculating how many shareholders would be eligible for compensation would require court direction.

There were questions over whether shareholders who had bought shares immediately and lost money were the only people eligible, or, whether people who had traded during the period that the market was "uninformed" were also eligible.

Diplock did not expect that court process to take too long.

She urged people who had bought Tranz Rail shares in early 2002 and lost money to contact the commission.

Meanwhile the commission was also making a list of the claimants with help from sharebrokers.

In 2004, after more than two years of investigation, the commission filed insider trading proceedings against Richwhite and five other leading Tranz Rail shareholders.

It was alleged that they avoided losses of up to $33 million by selling shares when they knew the publicly listed company had unpublicised problems.

The Defendants

* David Richwhite: Former director of Tranz Rail and director and corporate representative of Midavia.

* Midavia Rail Investments BVBA: The successor to Pacific Rail Limited NV, a Belgian company which was a substantial security holder in Tranz Rail.
Midavia and Richwhite yesterday settled for $20 million.

* Carl Ferenbach: Former director of Tranz Rail and managing director and corporate representative of Berkshire.

*Berkshire Fund III: A limited partnership operated under the laws of Massachusetts, USA.
Ferenbach and Berkshire settled for $7,380,509 in March last year.

* Mark Bloomer: Former chief financial officer and executive manager of Tranz Rail.
Settled for $156,000 in May 2005

*Michael Beard: Former managing director and CEO of Tranz Rail.
Settled for $155,692 in December 2004