Section 34: Prohibition of Insider Trading(1) No person shall engage in insider trading in relation to a derivative.(2) For the purposes of this section, insider trading means the buying or selling of a derivative by a person who has access to confidential information about the issuer of that derivative, and who knows or ought reasonably to know that the information is not generally available to the market and, if it were generally available to the market, would be likely to have a material effect on the price or value of the derivative.(3) Any person who contravenes subsection (1) commits an offence and is liable on conviction to a fine not exceeding $500,000 or to imprisonment for a term not exceeding 5 years, or to both.(4) This section applies to all derivatives traded on a licensed derivatives market in New Zealand.

Section 34 of the Securities Markets Act 1988 in New Zealand prohibits insider trading in relation to derivatives. This section applies to all derivatives traded on a licensed derivatives market in New Zealand. Insider trading refers to the buying or selling of a derivative by a person who has access to confidential information about the issuer of that derivative, and who knows or ought reasonably to know that the information is not generally available to the market and, if it were generally available to the market, would be likely to have a material effect on the price or value of the derivative. Any person who contravenes subsection (1) commits an offence and is liable on conviction to a fine not exceeding $500,000 or to imprisonment for a term not exceeding 5 years, or to both.

The purpose of this section is to ensure that the market is fair and transparent, and that investors have confidence in the integrity of the market. Insider trading can distort the market and disadvantage other investors who do not have access to the same information. It is important to note that this section applies only to derivatives and not to other securities.

There have been several cases in New Zealand where individuals have been prosecuted for insider trading. One such case is R v Hartley [2017] NZDC 2606, where Mr. Hartley was found guilty of insider trading in relation to shares in a company called Eroad Limited. Mr. Hartley had access to confidential information about Eroad’s financial performance and used this information to buy and sell shares in the company. He was sentenced to 10 months’ home detention and ordered to pay a fine of $50,000.

Another case is Securities Commission v Bridgecorp Holdings Ltd [2007] NZSC 7, where Bridgecorp Holdings Ltd was found to have engaged in insider trading by failing to disclose material information about its financial position. The company was fined $1.2 million for breaching section 18A of the Securities Act 1978, which is similar to section 34 of the Securities Markets Act 1988.

In both of these cases, the courts found that the individuals or companies had breached the relevant securities laws and had engaged in insider trading. The consequences of insider trading can be severe, both in terms of financial penalties and reputational damage.

It is important for individuals and companies to ensure that they are not engaging in insider trading and that they are complying with all relevant securities laws. This includes ensuring that they have appropriate policies and procedures in place to prevent insider trading, and that they are regularly reviewing and updating these policies and procedures to ensure that they remain effective.

In conclusion, section 34 of the Securities Markets Act 1988 prohibits insider trading in relation to derivatives traded on a licensed derivatives market in New Zealand. There have been several cases in New Zealand where individuals and companies have been prosecuted for insider trading, and the consequences of engaging in insider trading can be severe. It is important for individuals and companies to ensure that they are complying with all relevant securities laws and have appropriate policies and procedures in place to prevent insider trading.