The Financial Markets Authority (FMA) has filed civil High Court proceedings against NZX-listed New Talisman Gold Mines chief executive Matthew Hill for alleged information-based market manipulation and making false and misleading representations.
The case relates to anonymous posts Hill allegedly made about the company on the Sharetrader website's online investor forum.
The FMA claims that between February 2013 and July 2020, Hill made dozens of posts on Sharetrader in a thread about New Talisman under two usernames, "bullish" and "Epithermal".
Hill, who is also a director and shareholder of New Talisman, did not, at any point, disclose his involvement in the company, the FMA said it its claim.
Hill's conduct was revealed in July 2020 when Sharetrader publicly identified him as the person behind the usernames.
New Talisman Gold - the company - is not party to the proceedings.
Karen Chang, the FMA's head of enforcement, said market manipulation undermines confidence in financial markets, especially if it is by a senior executive at a listed company.
"We considered Mr Hill's conduct warranted a strong response to demonstrate that such actions will not be tolerated, and to maintain confidence in New Zealand's markets," she said in a statement.
"This case is an important reminder that information-based market manipulation can occur on social media and forums, where investors are increasingly gathering to discuss stocks. Investors should be careful when using forums to inform their investing decisions as they can be exploited by vested interests," she said.
Chang acknowledged Sharetrader's efforts to moderate its forum and for bringing this issue to light.
The proceedings have been filed in the Auckland High Court and the claim is yet to be served.
The FMA claim is based on two causes of action for alleged market manipulation under the Financial Markets Conduct Act 2013 and the Securities Markets Act 1988 and an alternative cause of action for alleged false or misleading representations.
The FMA is seeking from Hill a declaration of contraventions, a financial penalty and costs.
New Talisman Gold Mines is developing the historic Talisman Mine in the Karangahake Gorge near Waihi.
Its shares last traded on the NZX at 0.3 of a cent.
Sharetrader has been going for 20 years and can attract up to 30,000 visitors a day.