Carden Mulholland of collapsed CBL insurance must pay $1.2m for being an accessory
The Financial Markets Authority said this was the first time New Zealand courts had considered the liability of a chief financial officer acting as an accessory.
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The former chief financial officer of the failed CBL insurance group, Carden Mulholland, has been ordered to pay more than $1.2 million in penalties and costs by the High Court, for being an accessory to the breaking of information disclosure rules.
The court ruled in February that he
knew and participated in decision-making
, which resulted in information about the group's financial position not being disclosed to investors quickly enough.
Mulholland was penalised $641,250 for disclosure rule breaches, and also ordered to pay agreed costs of $606,216.
The Financial Markets Authority brought the civil case against Mulholland, alleging he knew about and was a party to the belated-disclosure of money owed to the group; the need for a $100m strengthening of the CBL Insurance reserves; and, the withholding of information about a direction of Irish regulators to a CBL subsidiary to hold additional cash reserves.
"The lack of disclosure by CBLC meant investors were denied timely access to material information and continued to trade, uninformed, for an extended period of more than five months," Justice Gault said in his penalty decision.
"I have addressed Mr Mulholland's significant involvement in these contraventions. The impact on the market was serious and far-reaching."
CBL's chief executive,
Peter Harris, and four directors settled out of court
with the FMA on the same issues.
The FMA's head of enforcement Margot Gatland repeated that the case and penalties were important.
"This was the first time New Zealand Courts had considered the liability of a CFO acting as an accessory to a company's contravention under the FMCA (Financial Markets Conduct Act)."
"The court's ruling and penalty demonstrate that such behaviour is unacceptable and will not be tolerated.
"The FMA will continue to take action when we see this type of misconduct damaging the trust and confidence in New Zealand's financial markets and businesses."
CBL was a sharemarket high-flyer when it listed in 2015, rising to a value of around $750m before collapsing in 2018, triggering a string of investigations and legal cases by the FMA and Serious Fraud Office.
The FMA has one outstanding case against Mulholland, Harris, and the estate of a now deceased director for alleged breaches of financial market rules over the CBL public share offer in 2015. It is set for hearing in April 2026.
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