ASIC has started legal action in the Federal Court of Australia against Newcrest Mining Limited (Newcrest) for briefing analysts on market-sensitive information ahead of it being disclosed to the market.
ASIC alleges that in a series of briefings to analysts, Newcrest disclosed, from 28 May 2013, information regarding Newcrest’s expected gold production for the 2013–14 financial year and on 5 June 2013 disclosed information regarding Newcrest's expected capital expenditure for the 2013–14 financial year.
ASIC alleges that as this information was market-sensitive and as it was selectively disclosed to analysts, Newcrest was obliged to disclose this information to the ASX. ASIC alleges Newcrest’s contraventions continued until 7 June 2013 when it made an announcement to the ASX which included its 2013–14 expected gold production, capital expenditure and other matters including write downs.
Newcrest has admitted the contraventions and the parties have filed a joint application for civil penalties to be imposed.
The court will hear a joint submission from ASIC and Newcrest as to the appropriate penalties. The parties will jointly propose a penalty of $800,000 for the first contravention (relating to the expected gold production for FY14) and $400,000 for the second contravention (relating to the expected capital expenditure for FY14). The actual amount of the penalties is a matter for the court to determine.
The parties will request an early hearing date from the court.
In noting the proceedings, ASIC Commissioner Cathie Armour said, ‘Companies should have regard to existing guidance in the market about how to conduct briefings to ensure confidential, market-sensitive information is not selectively disclosed.’
Download attachments to media release
Joint submissions (PDF 185 KB)
Agreed statement of facts (PDF 837 KB)
Background
Companies are subject to the continuous disclosure obligations in section 674 of the Corporations Act 2001. This imposes a statutory obligation on companies to comply with Listing Rules of the ASX.
ASX Listing Rule 3.1 provides that, once a listed entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities, the entity must immediately tell ASX that information. There are a number of carve outs to this obligation set out in Listing Rule 3.1A. However, when these cease to apply (this includes when information ceases to be confidential), the entity is required to make immediate disclosure of market sensitive information to the ASX under Listing Rule 3.1.
Companies which fail to make timely disclosures to the market face penalties of up to $1 million per contravention.
In May 2014 ASIC released a report following a review of how companies and their advisers handle confidential information (refer: 14-114MR). The report included recommendations for listed entities, analysts and advisers about how to ensure they comply with best-practice disclosure policies.
ASIC’s investigation to date has focused on Newcrest’s selective disclosure of information during May and June 2013. ASIC’s investigation into relation persons who received this information is ongoing.
Editor's note:
On 27 June 2104 ASIC and Newcrest's joint submission was heard by the Hon Justice Middleton of the Federal Court in Victoria. The decision was reserved until 2 July 2014.