Former CBL Group Chief Financial Officer (CFO), Carden Mulholland, has been ordered to pay a pecuniary penalty of $641,250 for breaches of the continuous disclosure requirements in the Financial Markets Conduct Act 2013 (FMCA), in proceedings brought by the Financial Markets Authority (FMA).
He has also been ordered to pay agreed costs of $606,216.53.
CBL Corporation Limited (CBLC) publicly listed in October 2015, and the contraventions occurred over a five-month period in the lead up to its subsequent collapse in February 2018. The High Court’s penalty decision follows a nearly six-week trial in the Auckland High Court before Justice Gault, which commenced in late June 2024 and concluded in early August 2024.
The FMA’s case against Mr Mulholland centred on his role as CFO of the CBL Group (for which CBLC was the parent company) and as a member of CBLC’s Disclosure Committee. He was also a director of CBLC’s European subsidiary, CBL Insurance Europe dac (CBLIE).
The Judge found that Mr Mulholland had the required level of knowledge and participation in three of CBLC’s continuous disclosure contraventions to make him personally liable as an accessory.
These related to:
- The existence and impact on regulatory solvency of approximately $35 million of aged receivables (insurance premiums owed to CBLI but not paid to it). This issue was known to CBLC by 24 August 2017 but not disclosed to the market until 5 February 2018.
- The need for CBLI to strengthen its reserves by approximately $100 million. This was known to CBLC by 25 January 2018 but not disclosed to the market until 5 February 2018.
- A direction issued to CBLIE by its prudential regulator, the Central Bank of Ireland, requiring CBLIE to hold additional cash reserves of €31.5 million. This was known to CBLC by 30 January 2018 at the latest but not disclosed to the market until 7 February 2018.
After the liability finding, the FMA and Mr Mulholland reached agreement on the recommended level of penalty that the Court has now approved.