FMA to investigate after complaint of unusual movements in the share price of telco.

The Financial Markets Authority says it will investigate the trading of shares in Chorus after receiving a complaint about unusual price movements on Friday.

Shares in the telecommunications network company rose 10c or 7.3 per cent on Friday - the day before Communications Minister Amy Adams released a report by Ernst & Young Australia on Chorus' ability to build the ultra-fast broadband network.

Yesterday, Chorus shares closed down 4c on $1.43.

"FMA has received one complaint about the trading of Chorus shares on Friday which we will look into in conjunction with NZX as the frontline regulator of the markets it operates," said a spokesman for the investment regulator.


It would also respond to a separate complaint from the Tele-communications Users Association of New Zealand (TUANZ) once it had received its letter.

The telco users group yesterday said it planned to lodge a complaint with the FMA, NZX and State Services Commission over unusual movements in Chorus' share price.

TUANZ chief executive Paul Brislen said it had noticed a pattern of Chorus shares moving significantly, ahead of each time Adams made a market-sensitive announcement. "While TUANZ is not making any accusations against anyone, many hundreds of millions of dollars are at stake," Brislen said.

"The strange price movements in Chorus shares over the last year merit investigation by the NZX and FMA [Financial Markets Authority] in order to assure everyone that no insider trading has occurred."

But Adams said based on TUANZ's track record she would not be paying much attention to the complaint. "As a number of the claims made by TUANZ and the coalition during this process have subsequently proven to not be correct, I'm not paying much attention to this one," she said.

"If TUANZ has evidence of wrong-doing then they should present it and I would hope that they would have before making allegations of this sort."

Brislen said it would also complain to the State Services Commission.

"Given the strange price changes all seem connected with government announcements, it also makes sense for the SSC to investigate the matter, as it did over the leaks about MFAT [Ministry of Foreign Affairs and Trade] restructuring."

Chorus said last month a Commerce Commission ruling to cut wholesale internet prices could lead to a $1.07 billion funding shortfall for its ultra-fast broadband scheme.

The Government then commissioned Ernst & Young (EY) Australia to investigate how the cuts would impact on Chorus' ability to deliver on its UFB Crown contracts.

It said Chorus could reduce the shortfall by introducing "cash-flow savings initiatives".

But the report said these initiatives carried potential risks, including receiving "lower service levels".

Chorus chief executive Mark Ratcliffe said the introduction of any initiatives "must be weighed carefully" against the risk they posed for consumers.

- additional reporting: Hamish Fletcher