ASIC welcomes ASX's release today of its findings on a review of disclosure of Directors' Interest Notices including trading by directors during the company's own 'black out period.
ASIC confirms that ASX on 22 May 2008 referred some 70 possible breaches by directors of the Corporations Act by failing to disclose to the market within 14 calendar days contrary to s205G of the Corporations Act.
ASIC is currently examining these and will, as necessary, take enforcement action.
To assist directors to better understand their obligations and when ASIC may take enforcement proceedings, ASIC has today released a new guide.
Regulatory Guide 193: Notification of directors’ interests in securities – listed companies (RG 193), provides information on how directors of listed companies should comply with the disclosure requirements created by section 205G of the Corporations Act.
ASIC regards s205G as an important part of the regulatory regime that, together with the prohibitions on insider trading and market manipulation, helps maintain an informed and orderly market.
All market participants, shareholders and other investors are entitled to know the shareholdings, and changes to those share holdings, of directors and their associates.
The guide covers the definition of ‘relevant interests’ and ‘securities’, circumstances where notification is not required and the identification of breaches.
It also covers the factors ASIC will take into consideration when determining whether to take action against a director by referring the matter to the CDPP. These factors include the amount of a company’s shares in question, whether a market announcement was made at or shortly after the time a notice should have been lodged and whether there have been any other instances of late lodgement of a notice by a director.
ASX foreshadows in its release today that there may be additional breaches that arise from trading during a "blackout" period which it may refer to ASIC. ASIC will immediately investigate any such referrals.
Background
ASIC has worked closely with the ASX to speed up the notification of referrals and minimise the time gap between the alleged misconduct and action. A system has been set up which ensures every referral received from the ASX is immediately reviewed.
Between January and May this year, the ASX referred 40 instances of suspicious conduct to ASIC. Of these 11 are being investigated for possible civil, criminal or administrative proceedings, 14 are under surveillance and 11 have been referred to ASIC's licensing unit for other possible action. Only four have been closed for insufficient evidence. In addition, we have one insider trading matter before the courts and six with the Commonwealth Director of Public Prosecutions (CDPP) and two market manipulation matters are with the CDPP.
Since ASIC came into being on 1 July 1998, ASIC has brought 15 successful criminal or civil cases against persons and entities for contravening insider trading laws. ASIC has also accepted one enforceable undertaking and made two administrative banning orders.