Former CBL CFO Ordered to Pay NZ$1.25 Million
In a landmark ruling that may have far-reaching implications for financial governance in the insurance sector, the former chief financial officer of collapsed New Zealand insurer CBL has been ordered to pay more than NZ$1.25 million. Carden Mulholland, who served as CFO in the months leading up to CBL’s 2018 collapse, was found guilty of multiple contraventions of New Zealand’s Financial Markets Conduct Act (FMCA).
The High Court in Auckland held Mulholland personally liable as an accessory to CBL’s breach of continuous disclosure obligations, marking the first time a New Zealand court has imposed such liability on a CFO. The court ordered Mulholland to pay a pecuniary penalty of over NZ$640,000 and legal costs amounting to NZ$600,000.
CBL, which sold policies in the UK through its Irish-regulated subsidiary CBL Insurance Europe DAC, collapsed in early 2018 due to solvency concerns related to its European insurance portfolio. The company’s failure left thousands of policyholders in limbo across France, Ireland, and the UK, with shareholders losing their entire investments.
The court’s ruling highlighted that CBL failed to inform the market about material developments in a timely manner, including its urgent need to raise NZ$100 million in reserves and actions taken by the Central Bank of Ireland to restrict its operations. Justice Ian Gault concluded that investors were denied timely access to material information and continued to trade uninformed for over five months.
This decision is likely to resonate beyond New Zealand, particularly in jurisdictions like the UK, where regulators have been emphasizing individual accountability within senior management. The ruling reinforces the legal risks faced by CFOs and compliance officers in firms operating cross-border business, especially when companies fail to act transparently under stress.
The CBL collapse triggered regulatory action across multiple jurisdictions. CBL Insurance Europe DAC was placed into liquidation in 2020, and compensation schemes in the UK and Ireland were activated to protect affected policyholders. In France, CBL’s withdrawal created a significant protection gap, particularly for homebuyers insured through decennial liability products.
The case is part of ongoing litigation in New Zealand, where the Financial Markets Authority has launched further actions related to alleged misleading statements in CBL’s 2015 initial public offering documents. Class action proceedings from shareholders and creditor claims against former executives and professional advisers are also progressing through the courts.
For CFOs and compliance officers, the judgment serves as a warning about the personal liability risks associated with governance failures and the importance of transparent financial disclosures, particularly in times of stress.
