ASIC has started legal action in the Federal Court of Australia against German construction group holding company Hochtief Aktiengesellschaft (Hochtief AG), seeking a declaration of contravention and a financial penalty order against the company for insider trading.
ASIC’s action centres on the early 2014 on-market acquisition of ordinary shares of Leighton Holdings Limited (now called CIMIC Group Limited) (ASX code: LEI) by Hochtief AG's subsidiary, Hochtief Australia Holdings Limited (HAHL).
ASIC alleges that Hochtief AG contravened the insider trading provisions of the Corporations Act by procuring HAHL to acquire LEI when, on, 29 January 2014, it varied previous instructions to acquire a large parcel of LEI (by pushing out the last day to purchase the shares from 31 January 2014 to 14 February 2014) while it was in possession of insider information, being that Leighton Holdings Limited's 2013 financial results were likely to be at the high end of previous earnings guidance.
Hochtief AG has admitted the alleged contravention.
The proceedings will be listed for a directions hearing in the Federal Court in Sydney on a date to be advised.
HAHL is ultimately owned and controlled by Hochtief AG which, in turn, has as its majority shareholder one of the world's leading construction companies, the Spanish company ACS Actividades de Construcción y Servicios S.A.
HAHL is operated by Hochtief AG as a vehicle to hold, acquire and dispose of securities and other financial products, including LEI, for Hochtief AG.
A Form 604 ‘Notice of Change of interests of substantial holder’ dated 5 February 2014 and filed with the ASX disclosed HAHL's relevant share acquisitions.
On 20 February 2014, Leighton reported its FY2013 Underlying NPAT was up 30% on FY12 to $584M, which was within guidance. The company also reported NPAT of $509M, which was up 13% on FY12.
On 19 February 2014, LEI closed at $16.41. On 20 February 2014, following the results announcement, LEI opened at $18.30 and traded as high as $18.40 and as low as $16.90 before closing at $17.21, or up 4.88% on the previous day’s close.
Editor's note 1:
On 3 February 2016, the matter was listed for directions on 1 March 2016.
Editor's note 2:
On 3 March 2016, the Federal Court of Australia ordered that the question of whether the Hochtief AG contravened as alleged be determined separately from and in advance of the determination of what relief should be granted and, that, at the hearing on liability, the number of days on which HAHL traded in LEI by reason of the Hochtief AG's contravention is to be determined. Those matters have been set down for hearing on 12 April 2016.
Editor's note 3:
On 12 April 2016, the matter was adjourned until 18 April 2016.
Editor's note 4:
On 18 April 2016, the matter was adjourned to 25 May 2016.