Financial Markets Authority v Hill - [2024] NZHC 1353

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1266

[2024] NZHC 1353

UNDER the Financial Markets Conduct Act 2013

BETWEEN

FINANCIAL MARKETS AUTHORITY

Plaintiff

AND

MATTHEW GEOFFREY HILL

Defendant

Hearing: 19 February 2024

Counsel:

A Luck and A D Gormack for the Plaintiff M A Cavanaugh for the Defendant

Judgment:

27 May 2024

JUDGMENT OF GAULT J

This judgment was delivered by me on 27 May 2024 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors:
Mr N F Flanagan and Mr A Luck, Meredith Connell, Office of the Crown Solicitor, Auckland Mr A D Gormack, Financial Markets Authority, Auckland
Mr W A Holden, Mr C M Laband and Mr M A Cavanaugh, Wotton + Kearney, Auckland

FINANCIAL MARKETS AUTHORITY v HILL [2024] NZHC 1353 [27 May 2024]

Introduction

[1] The Financial Markets Authority (FMA) seeks a declaration of contravention and a pecuniary penalty against Mr Hill for contravening s 22(d) of the Financial Markets Conduct Act 2013 (FMCA).

[2] By notice of admissions dated 24 January 2024, Mr Hill has admitted to making false and/or misleading representations in breach of the FMCA by publishing a series of anonymous posts (under two pseudonyms) on an internet discussion forum or bulletin board dedicated to trading in financial products (Sharetrader).

[3] The conduct arose from Mr Hill’s posts regarding a publicly listed company, New Talisman Gold Mines Ltd (New Talisman). At the time of the posts, Mr Hill was the Chief Executive Officer of New Talisman, as well as a shareholder and director.

[4] In his posts published over a period of several years, Mr Hill typically either praised the performance of New Talisman, its management and its investment potential, or derogated other users who presented less positive views about New Talisman’s prospects. A number of the posts also contained elements which conveyed the impression that Mr Hill was someone who had significant industry knowledge but who was unaffiliated with New Talisman. Mr Hill’s posts only stopped when an administrator of the website discovered his identity and suspended his accounts.

[5] The FMA and Mr Hill have agreed to recommend that the Court impose a pecuniary penalty of $100,000 on Mr Hill, but acknowledged that the amount of any pecuniary penalty to be imposed is a matter for the Court. The parties provided helpful written and oral submissions.

[6] This judgment addresses the appropriate declaration of contravention and pecuniary penalty.

Agreed facts

[7] The parties filed a detailed agreed statement of facts. The following is a summary from the FMA’s submissions, with which Mr Hill agreed (subject to two additions noted below).

Background

[8] New Talisman is a company listed on the New Zealand stock exchange and the Australian stock exchange. Its business broadly involves gold mining and exploration. At all relevant times, Mr Hill was a director, shareholder, and Chief Executive Officer of the company. Broadly, Mr Hill was responsible for overseeing New…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 1353
Decision Date: 27 May 2024

CaseChat Overview and Summary

The Financial Markets Authority (FMA) brought proceedings against Matthew Geoffrey Hill, the former Chief Executive Officer, shareholder, and director of New Talisman Gold Mines Ltd, for contravening s 22(d) of the Financial Markets Conduct Act 2013 (FMCA) by publishing anonymous posts on an online forum, Sharetrader, promoting New Talisman and disparaging dissenting opinions. The court was required to decide whether Mr Hill contravened the Act and, if so, the appropriate declaration of contravention and pecuniary penalty. The court found that Mr Hill’s conduct was deliberate and concealed his connection to New Talisman, which undermined the public’s trust in financial markets. The court accepted the agreed penalty of $100,000, noting the seriousness of the conduct, the need for deterrence, and Mr Hill’s cooperation and admissions. The court ordered that the penalty be applied first to the FMA’s costs. The court made a declaration that Mr Hill contravened s 22(d) of the FMCA and ordered him to pay a pecuniary penalty of $100,000, with the penalty applied to the FMA’s costs before any distribution.

Orders