Watchdog hones in as reporting season creeps up

In the wake of gold miner Newcrest’s reporting scandal the market regulator will increase its scrutiny on company communications during the upcoming reporting season.

The Australian Securities and Investments Commission said it would be watching the way companies communicate with analysts and investors as they report June-quarter and financial-year results, SMH reported.

The heightened attention will include spot checks and an awareness campaign to educate market participants about the penalties that apply for selectively informing people of market-sensitive information.

In June Newcrest shares dropped 12 per cent before the company disclosed plans to cut up to $AU6 billion is asset values, shelve expansion plans and slash exploration activities.

The pre-emptive trading sparked an ASIC investigation to find out if certain analysts were brought into the loop before the announcement.

Although ASIC sought to distance its compliance project from the ongoing Newcrest investigation, ASIC commissioner Cathie Armour did acknowledge the Newcrest scandal helped launch the project.

''Some of the commentary after Newcrest's early June announcement put the spotlight on a more general issue of companies and their briefings of research analysts,'' she said.

The project is similar to ones that have been run in previous years, participation is voluntary and companies will be aware regulators are in attendance.

''Our plan is that we will ask a sample group of companies across a range of sectors and geography who are listed on Australian markets if they would be willing to have ASIC staff attend their analyst presentations when they produce their financial reports,'' Armour said.

Following the June 7 Newcrest controversy the company has hired former ASX chairman Maurice Newman to investigate its conduct and uncover any potential problems.

The internal investigation is expected to be finalised in the next couple of months.

Newcrest has to date denied breaching disclosure laws by selectively briefing analysts with market-sensitive information, saying it "treats its disclosure obligations seriously and engages with the investment community in a manner consistent with those obligations".

 

Image: SMH

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