22 December 2023

CBL Corporation and four independent directors ordered to pay penalties for conduct including reckless and careless breaches of the Financial Markets Conduct Act

Media Release 
MR No. 2023 – 63

The High Court has ordered CBL Corporation Limited (CBLC) and four of its former directors to pay penalties for continuous disclosure and misleading conduct breaches following proceedings brought by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – under the Financial Markets Conduct Act 2013. 

The proceeding related to CBLC, a listed entity, failing to disclose material information to the market during 2017 and 2018. The FMA alleged, in particular, that: 

  • CBLC failed to comply with its continuous disclosure obligations in relation to:
    • the need for its primary operating subsidiary, CBL Insurance Limited (In Liquidation) (CBLI), to strengthen its reserves;
    • the existence and impact of a large amount of aged receivables (insurance premiums owed but not paid) in respect of business originated by Securities and Financial Solutions Europe SA, a French insurance business; and
    • directions issued to and conditions imposed on CBLC’s subsidiary in Ireland, CBL Insurance Europe dac, by the Central Bank of Ireland; and
  • CBLC engaged in misleading and deceptive conduct in respect of its market announcement on 24 August 2017.  

CBLC and the four directors – Sir John Wells (who was Chair of the CBLC Board of Directors), Tony Hannon, Paul Donaldson, and Ian Marsh (each of whom was an independent non-executive director of CBLC) – entered into settlement agreements with the FMA in May this year to resolve the proceeding, which included them making admissions of liability on seven contraventions of the Financial Markets Conduct Act, and jointly agreeing to support the level of penalties that the Court has now approved.  

Following a penalty hearing in the High Court in Auckland on 4 December, Justice Gault has declared CBLC and the four directors breached the fair dealing and continuous disclosure provisions under sections 22 and 270 of the Financial Markets Conduct Act and imposed pecuniary penalties.*  

Sir John Wells, Mr Donaldson and Mr Marsh were each ordered to pay the jointly submitted penalties of $1 million; Mr Hannon was ordered to pay the jointly submitted penalty of $1.1 million. Mr Hannon’s penalty was higher than that of the other directors to reflect his elevated culpability in respect of one of the breaches.  

CBLC was ordered to pay the jointly submitted penalty of $5.78 million. Because the company is in liquidation, the FMA will not seek to enforce payment of the penalty so that CBLC’s assets can be used to repay creditors and investors as much as possible. 

In his decision, released today, Justice Gault agreed with the FMA that: “the present case is the epitome of what the fair dealing provisions and continuous disclosure regime are designed to prevent”.  His Honour continued: “The conduct was completely inconsistent with promoting the confident and informed participation of business, investors and consumers in New Zealand’s financial markets”.  The lack of accurate disclosure “meant that investors were wholly unaware of the escalating problems at CBLC”.  The Judge agreed the defendants’ conduct was reckless or careless in relation to six of the seven contraventions. 

FMA Head of Enforcement Margot Gatland said: “This is the first case brought under the continuous disclosure provisions of the Financial Markets Conduct Act and shows that the FMA will hold to account companies and directors for breaches of continuous disclosure.  Disclosure is a fundamental obligation which ensures New Zealand’s listed capital markets are efficient, transparent and fair, and that there is equality of information in the market.  As the Court made clear, the contraventions in this case denied investors access to accurate and timely information and the impact on the market was very serious.” 

The defendants have settled separate civil proceedings with shareholders and liquidators for a sum of $72.5 million which includes personal contributions by each of CBLC’s directors and will see approximately 53% of the sum paid to CBLC shareholders who participated in the proceedings.  The settlement was entered into without any admission of liability by the defendants and the sum is payable on behalf of CBLC and all of CBLC’s directors. 

Read the judgement



CBLC was listed on the NZX Main Board in 2015. It had a market capitalisation of $747 million, and a share price of $3.17, when trading of its shares was halted and then suspended in February 2018. The company was put into voluntary administration in February 2018, and then placed in liquidation in May 2019. 

The FMA filed two proceedings in 2019 alleging breaches of the Financial Markets Conduct Act 2013.  

While the FMA has settled its proceeding relating to fair dealing and continuous disclosure breaches against CBLC and the four independent directors, that proceeding continues against Peter Harris (Managing Director) and Carden Mulholland (former Chief Financial Officer). A trial is set down for June 2024. 

The other proceeding relates to the documentation supporting CBLC’s initial public offer in 2015. This proceeding is brought against CBLC, Peter Harris, Alistair Hutchison (a former non-executive director),** and Carden Mulholland, but not against Sir John Wells, Tony Hannon, Paul Donaldson or Ian Marsh. This proceeding has not settled and is also set for trial at the same time. 



*Section 22 is one of the fair dealing provisions of the Financial Markets Conduct Act 2013, namely making false or misleading representations. Section 270 provides that listed issuers must disclose information in accordance with the listing rules if the continuous disclosure listing rules apply.  The listing rules applied to CBLC during the period of the above breaches.  Sir John Wells, Tony Hannon, Paul Donaldson and Ian Marsh breached sections 22 and 270 by their involvement in CBLC’s breaches pursuant to section 533. 

**Mr Hutchison died in December 2021, but the claim continues against his Estate. 


Media contacts:

Andrew Park  
FMA Media Relations Manager  
[email protected]
021 220 6770 

Matt Chatterton  
FMA Senior Adviser, Media Relations  
[email protected]
021 241 7868