Newcrest ruckus sets market watchdog growling over reports
The disclosure scandal surrounding Newcrest Mining has prompted Australia's market regulator to increase its focus on company communications during the coming reporting season.
The Australian Securities and Investments Commission said it would devote extra attention to the way companies communicate with analysts and investors over the next couple of months, when most companies report their June-quarter and financial-year results.
The project will involve spot checks on certain companies and will be accompanied by a campaign to ensure market participants are aware of the penalties that apply for those found to be selectively informing others of market-sensitive information.
ASIC sought to distance the project from the investigation into Newcrest's conduct in May and last month, when a host of analysts and many investors appeared to anticipate a restructure.
But ASIC commissioner Cathie Armour acknowledged that the Newcrest saga did help spark 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," Ms Armour said.
The project is similar to one that has been run in previous years, and is separate to another long-running investigation into how companies manage confidential information.
"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," she said.
Whether the increased focus will achieve results remains unclear; participation will be voluntary for companies and they will be well aware that regulators are in the room at the time.
The project is not expected to require companies to disclose full records of all interactions with big investors and analysts. But it seems the public outrage that followed the Newcrest saga has already imposed a mood of extreme caution on those employed by ASX-listed companies, and those working in the financial industry.
Several employees of large listed companies have confided to BusinessDay that higher levels of caution are being taken when arranging interviews and information for public consumption.
The mood has been reflected in some investment bank research notes too. Some analysts have taken to outlining what was not discussed at recent company briefings, as well as topics that were discussed.
Newcrest has hired former ASX chairman Maurice Newman to investigate its conduct before the June 7 controversy, in a bid to uncover any potential problems.
That investigation is expected to be concluded within a couple of months, while some believe ASIC's formal investigation into the Newcrest controversy may not reach a conclusion before Christmas.
The June 7 restructure and the subsequent controversy took a massive toll on Newcrest's share price last month. However, many investors seem to think it has bottomed, and the stock has risen by about 20 per cent over the past two weeks.