Market sensitive information leaked to brokers: ASIC
28 May 2014
Market sensitive information was being leaked to brokers by companies in the lead up to major reporting periods and corporate deals, an investigation by the Australian corporate watchdog had found, The Courier Mail reported.
Some company analysts too did not understand or ignored outright their own rules of handling market sensitive information, according to a yearlong report by the Australian Securities and Investments Commission.
The corporate enforcer would intensify its scrutiny of analysts' research reports and investor briefings over the coming months as it bid to put an end to selective briefings and observe how analysts were supervised.
ASIC commissioner Cathie Armour warned yesterday that ASIC's real-time market surveillance system gave the watchdog the ability to aggressively interrogate trades ahead of announcements. She added ASIC would take enforcement action where appropriate.
Companies and their staff risked prosecution if they flouted rules on continuous disclosure and insider trading.
Despite the breaches, according to ASIC investors could be confident in the integrity of the Australian market and further law changes were not needed.
According to ASIC commissioner John Price, Australia's rigorous continuous disclosure regime, combined with sound guidance and robust industry standards ensured retail investors could be confident in the integrity of the market.
The move comes following an ASIC review of market-sensitive leaks to the media last year, triggered by the Newcrest Mining scandal, according to The Australian.
The watchdog had been looking into whether analysts had been tipped off by the miner, last August about lower than expected 2014 profit.
Though ASIC Tuseday refused to comment on the Newcrest investigation, according to commissioner Cathie Armour, a wide range of analysts' research reports would be scrutinised as part of a wider crackdown on leaked information.
She added, in coming months ASIC would be proactively looking at how research analysts produced their reports.
She said the regulator would be talking to the analysts and the brokers and would monitor the whole market.
She added, the activity would not be limited to a particular sample but the regulator would be looking at incidences where reports might change.
According to ASIC's review, while investor briefings were a useful addition to formal market announcements, they were also a "significant risk area for selective disclosure of market-sensitive information".
