Market rules and lax media blamed for enabling hoax
Fears that market rules have encouraged the media to publish speculative information and conduct "fishing expeditions" have been a recurring theme of the review being run by the ASX into its "continuous disclosure" rules.
The revelations from the ASX's chief compliance officer, Kevin Lewis, come after a week in which the media was criticised for its role in a hoax against Whitehaven Coal, which was briefly reported as fact by several publications.
Mr Lewis said the continuous disclosure review was only halfway through its consultation phase, but a clear theme had already emerged. "A major issue that has been raised by many listed companies in that consultation is the impact of the media [both conventional and social] on markets," he said.
"There is a real concern among listed companies that because ASX requires them to respond to credible media articles that could impact on their market price, this is creating an incentive for journalists and others to conduct fishing expeditions and to publish speculative information with a view to flushing out the correct information from the company."
The principle of continuous disclosure deems that a company must disclose to the market any information that could affect its share price as soon as the information comes to hand. The system sometimes sees companies file announcements to the ASX disclosure page that respond to suggestions made in the media.
"There is also a concern that people are misusing media connections and leaking information deliberately to embarrass companies into making disclosures," Mr Lewis said.
The ASX released a draft of new continuous disclosure provisions in October, which Mr Lewis described at the time as being the "single most important" guidance note revision at the exchange for several years.
Among the proposed changes, the ASX has clarified that "immediate" disclosure of market-sensitive information does not mean it must be communicated to the ASX "instantaneously", but rather "promptly and without delay".
Mr Lewis was one of several commentators to question the media's performance last week in relation to the Whitehaven hoax, which saw more than $300 million temporarily wiped off the value of Whitehaven after a hoax press release claimed the company had lost a crucial $1.2 billion loan.
The bogus press release was reported as fact by some media, but had actually been concocted by an environmental campaigner living in a bush camp near Narrabri.
In comments published by Fairfax Media on Saturday, Mr Lewis said the incident highlighted an issue that online media in particular needed to tackle.
"I think they may be trying to get information out too quickly without subjecting it to the same editorial oversight and verification processes as their print cousins," he said.
"A case can be made that online media should wind back its timing expectations for the publication of online articles and make sure it's subject to proper editorial oversight and verification processes."
Frequently Asked Questions about this Article…
ASX continuous disclosure is the principle that listed companies must tell the market any information that could affect their share price as soon as that information comes to hand. For investors, it means material news should be published promptly so everyone has the same access to price-sensitive information — helping protect fair and transparent markets.
Media reports — both traditional and online — can move share prices if they suggest a company has market-sensitive news. The ASX requires companies to respond to credible media articles, so speculative or unverified reports can trigger official announcements and short-term market reactions.
A bogus press release falsely claimed Whitehaven Coal had lost a crucial $1.2 billion loan. Several outlets reported it as fact, and more than $300 million was temporarily wiped off Whitehaven's value. The release was later revealed to have been concocted by an environmental campaigner living near Narrabri.
Companies worry the disclosure rules create an incentive for journalists or others to publish speculative information or conduct 'fishing expeditions' to force a company response. There's also concern about deliberate leaks and misuse of media connections to embarrass companies into making disclosures.
The ASX released a draft of revised continuous disclosure provisions in October. One notable clarification is that 'immediate' disclosure of market-sensitive information does not mean instantaneous publication to ASX, but rather that companies must act 'promptly and without delay.'
Be cautious: wait for an official ASX announcement or the company's statement before making trading decisions. The article highlights problems with online outlets publishing quickly without the same verification as print media, so checking the ASX announcements/disclosure page is a sensible step.
Yes. The system sometimes sees companies file announcements on the ASX disclosure page specifically to respond to suggestions made in the media, because they're required to address credible reports that could affect market price.
According to the ASX's chief compliance officer, online media may be trying to publish too quickly without full editorial oversight and verification. That can increase the risk of inaccurate reports reaching investors, which is why some argue online outlets should slow timing expectations and strengthen verification processes.
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