Chief financial officer of failed insurer CBL Corporation, Carden Mulholland, was hit with a double whammy: ordered to pay $641,000 as penalty for failure to prod CBL’s board into making earlier disclosure of insolvency, while also being lumbered with FMA costs of another $606,000 with the High Court noting no costs claim was made against CBL directors similarly held liable.
When approving the order against Mr Mulholland for payment of some $1.2 million, Justice Gault commented some of the costs order imposed on Mr Mulholland could have been shared amongst directors.
In 2023, independent CBL directors Sir John Wells, Paul Donaldson and Ian Marsh were held liable to pay one million dollars each for breaches of the Financial Markets Conduct Act. Anthony Hannon, chair of CBL’s audit and financial risk committee, was ordered to pay $1.1 million.
Their liability followed failure to keep the market fully informed of off-shore risks ultimately leaving CBL insolvent. The insurer collapsed in 2018.
In a court approved deal with the Financial Markets Authority, Mr Mulholland agreed to pay a $641,250 penalty. He faced a maximum penalty of three million dollars.
He had been with CBL for ten years prior to its collapse.
In his role as chief financial officer he had intimate knowledge of CBL’s worsening financial position. Liability followed from what was described as his failure to keep CBL’s board fully informed.
Within CBL, he was designated ‘Regulatory Public Disclosure Officer.’
First claim on this $641,250 penalty is Financial Market Authority itself.
Securities market regulation is partly self-funded; sinners pay. Financial Markets Conduct Act requires penalties be applied in payment of Financial Markets Authority investigation and prosecution costs.
This may lead to the Authority being over-compensated, with the amount of a penalty resulting from any particular investigation exceeding costs, Justice Gault commented.
The High Court was told the Authority has a memorandum of understanding with the Crown covering the interplay between central government funding and receipt of penalty payments. Details of this memorandum were not disclosed.
Agreeing to accept the Authority’s demand for recovery of $606,200 costs, Mr Mulholland said he acknowledged the all-up figure of $1.2 million he has to pay is less than actual costs incurred by the Authority in its CBL investigations and litigation.
Financial Markets Authority v. Mulholland – High Court (25.06.25)
25.145