ASIC's earnings eye

The market watchdog will closely monitor companies' interaction with investment analysts this earnings season, following the Newcrest affair.

The Australian Securities and Investments Commission says it will be examining the communication between companies and investment analysts in the weeks ahead as listed corporations report their 2013 earnings.

“All investors, large and small, should have access to equal information from listed entities when making their investment decisions,” ASIC commissioner Cathie Armour said in a statement on the government entity’s web site.

The government entity, that enforces laws to protect investors, consumers and creditors, has been forced to take a more proactive role in ensuring information that may possibly affect a company’s earnings and its stock price is disclosed to all in the wake of questions about Newcrest’s disclosure practices (see.

Between May 9 and June 6, Newcrest’s shares dropped 24% before the gold miner said on June 7 it would write down as much as $6 billion of the value of its assets. Citigroup, Credit Suisse and UBS analysts cut their investment recommendations on Newcrest shares in the days before the company’s announcement (see our video What should investors do about Newcrest?).

“ASIC will look to conduct spot checks with selected companies so we can hear how companies brief analysts and understand their procedures,” said the regulator. “We anticipate that companies and securities houses will be pleased to assist us in this exercise to promote market integrity.”

On June 25, Melbourne-based Newcrest said it has appointed former ASX chairman Maurice Newman to examine its disclosure and investor relations policies. ASIC is examining Newcrest’s conduct.

Since June 7 Newcrest shares have fallen 20%, but since June 25 the stock has gained 6.5%.

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