The New Zealand Financial Markets Authority (FMA) has dropped its court action against Insured Group over breaches of continuous disclosure.

The case was started by the former NZ Securities Commission last year and centred on alleged disclosure breaches in 2008 by the Lombard Group, which was subsequently taken over by Insured Group.

FMA CEO Sean Hughes says the authority decided to withdraw the proceedings in the NZ High Court due to the workload it had taken over from the commission.

“We need to focus our energy and resources on the most serious areas of misconduct, and against perpetrators who set out to deliberately mislead or deceive innocent third parties,” he said.

“We concluded that the civil proceedings against Insured Group did not meet FMA’s current tests for the types of matters we will prioritise.”

Mr Hughes says the action would have affected shareholders who had no involvement with the Lombard directors who were at the centre of the alleged breaches.

The Lombard Group collapsed in April 2008 and in March last year was subject to a reverse takeover by Insured Group to obtain an NZX listing.

The FMA has instigated legal proceedings against the former Lombard directors, alleging they made false statements in an offer document during 2007 and 2008. These will be heard at a High Court hearing in October.

The commission’s case against Insured Group alleged Lombard failed to disclose the circumstances giving rise to untrue statements to the market which breached the continuous disclosure obligations of the Securities Markets Act.

However, as part of the agreement for dropping the case, Insured Group has assured the FMA it will comply with continuous disclosure rules required by the NZX.

Insured Group MD Wayne Miller says the company has welcomed the move pointing out the actions of Lombard had no connection with the current business.

He says with the threat of legal action out of the way, the company will now concentrate on an Australian listing.

“Our company is well advanced to achieve a compliance listing on the Australian Stock Exchange and foresee the benefits for a broad capitalisation plan which encompasses both countries to achieve our growth strategy for the future,” he said.