New Zealand Financial Markets Authority wins High Court continuous disclosure case against former CBL Group CFO

The New Zealand Financial Markets Authority (FMA) has succeeded in High Court proceedings alleging that former CBL Group Chief Financial Officer Carden Mulholland breached the continuous disclosure provisions of the Financial Markets Conduct Act 2013 as an accessory to CBL Corporation’s (CBLC) disclosure contraventions. The Court found Mr Mulholland personally liable for three continuous disclosure breaches, in what the FMA described as the first New Zealand case to consider a CFO’s accessory liability under the Act. The findings relate to non-disclosure of (i) the existence and solvency impact of approximately $35 million of aged receivables known by 24 August 2017 but disclosed on 5 February 2018, (ii) the need for CBLI to strengthen reserves by approximately $100 million known by 25 January 2018 but disclosed on 5 February 2018, and (iii) a Central Bank of Ireland direction requiring CBL Insurance Europe dac to hold additional cash reserves of EUR 31.5 million known by 30 January 2018 at the latest but disclosed on 7 February 2018. The Court also indicated that accessory liability is not necessarily confined to board members, and that senior officers with relevant responsibilities may be exposed if they fail to ensure the board is aware of material information and considers whether it must be disclosed. Mr Mulholland was not found liable on two other causes of action, including a fair dealing claim linked to an August 2017 market announcement. A further hearing to determine penalty is expected in the coming months. Separately, a related FMA proceeding concerning alleged Financial Markets Conduct Act breaches at the time of CBLC’s 2015 initial public offering is set down for a six-week trial starting 13 April 2026.