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The Financial Markets Authority has accused Brian Henry, venture capitalist, of market manipulation of shares in NZX-listed Diligent Board Member Services.
Mr Henry was a founding member of Diligent, a company that has been marred by missteps over its administrative disclosures, before he left in March 2009.
The FMA's proceedings "contain six claims alleging certain orders and trades made by Mr Henry in 2010 breached the market manipulation provisions of the Securities Markets Act", the market regulator says in a statement. Its investigation followed a referral from NZX.
FMA head of enforcement Belinda Moffat says it is the first market manipulation case to be taken in New Zealand.
"Market manipulation interferes with the integrity of New Zealand's financial markets and harms the function of open, transparent and efficient capital markets," she says in the statement.
The FMA saysthe next step will be for Mr Henry to file his statement of defence.
Shares of Diligent rose 0.8 percent to $6.55 on the NZX today.