Regulator warns AIRA of ‘enforcement action’ for giving information to analysts before market
The Australian Securities & Investments Commission (ASIC) has directly warned in a speech to IROs that it will consider ‘enforcement action’ against those who give analysts potentially share-moving information before telling the Australian Securities Exchange.
‘If we see evidence of market abuse during this process we will look at enforcement action for those involved,’ ASIC commissioner John Price said in a speech to IR professionals, according to a report in The Australian. ‘Let me be clear: we expect investor relations professionals to interact with analysts in a way that complies with this obligation.’
Price made the comments at an event hosted by the Australasian Investor Relations Association (AIRA) amid rising controversy over share price moves at Australian gold miner Newcrest in June. Newcrest shares fell 12 percent in the two days before it announced billions of dollars worth of write-downs, alongside plans to reduce costs and shelve planned expansions and explorations.
The price move prompted complaints from investors and calls for greater oversight of meetings between companies and analysts ahead of important announcements. ASIC is investigating whether certain analysts received the Newcrest information before the markets in selective briefings. Newcrest says it did not selectively communicate the information.
The commission has also announced that it will undertake a series of spot-checks on briefings companies give to analysts to help ensure they comply with current regulations as the country’s public firms start releasing annual and mid-term results this month. Price also told AIRA the regulator was considering further steps.
‘We think it is important to address any perception about there being unfair differences in access to material information and we want to get the best facts we can on this issue before we decide on any further steps,’ he said in his speech, according to The Australian.
Last month, AIRA’s CEO Ian Matheson said the commission’s check ‘could be useful’.
‘We would be very concerned, however, if ASIC came out and banned one-on-one meetings or constrained how they operated,’ Mattheson added. ‘It would be detrimental to companies’ need to assist analysts to model the company properly and would stifle the Australian capital market, thereby putting us at a disadvantage.’
