Plus SMS fined $50,000; further investigation required
Suspended issuer Plus SMS has been fined $50,000 for breaching NZAX listing rules and faces further investigation for allegedly passing information to some shareholders without informing the entire market.
The NZ Markets Disciplinary Tribunal found Plus SMS, a would-be text messaging company, acted in breach of two rules when it failed to file its preliminary results by June 14, 2009.
The company is still in breach and remains suspended from the stock market.
Aside from the fine, which the Tribunal decided should be $15,000 more than the $35,000 recommended by the NZX, Plus SMS has been ordered to pay costs and expenses of both the tribunal and the NZX.
Plus SMS has been given 20 business days to file its accounts or face having its listing cancelled.
Plus SMS had argued that its breach was caused by the actions of its former chief executive Christopher Tiensch and chief financial officer Les Coats. Both were forced out of the company last year – a situation still being contested in US courts.
But the tribunal found that Plus SMS had not taken adequate steps to mitigate its breach and aggravated that by failing to adequately communicate with either the NZX or the market.
“[Plus SMS] lacked appropriate governance arrangements to ensure that the conduct that gave rise to the breach such as holding company records at personal residences, did not occur,” the tribunal, headed by division chairman Simon McArley, said.
“While the board of a listed issuer may utilise employees, external accountants and auditors, the maintenance and availability of accounting and business records remains the responsibility of the directors.
“The Tribunal viewed this failure of governance as a serious aggravating factor.”
The tribunal also noted, with concern” that Plus SMS’s submissions “suggest that it may have informed its shareholders of the problems it was experiencing, without passing the same information to the market.”
The tribunal recommended that NZX examine whether these “direct communications with shareholders, which have not been released to it or the market,” represent further breaches of the rules.
The penalties follow an earlier decision by the Securities Commission that Plus SMS had in 2006 made unfounded claims about its prospects but said it couldn’t do anything because at the time it didn’t have the powers.