Newcrest ruckus sets market watchdog growling
The disclosure scandal surrounding Newcrest Mining has prompted Australia's market regulator to increase its focus on company communications during the imminent reporting season.
The Australian Securities and Investments Commission said it would devote extra attention to the way companies communicated with analysts and investors over the next couple of months, as most companies report their June-quarter and financial-year results.
The project will involve spot checks on companies, accompanied by an awareness campaign to ensure market participants know the penalties that apply for selectively informing others of market-sensitive information.
ASIC sought to distance the project from the ongoing investigation into Newcrest's conduct in May and June, when a host of analysts and many investors appeared to anticipate a major corporate restructure. But ASIC commissioner Cathie Armour acknowledged 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," she 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," said Ms Armour.
Whether the increased focus will achieve results remains unclear; participation will be voluntary for companies and they will be well aware that regulators are present.
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 much higher levels of caution are being taken when arranging interviews and information for public consumption.
The mood has been reflected in investment bank research notes too, in which some
analysts have taken to outlining what was not discussed at briefings, as well as topics that were discussed.
Newcrest has hired former ASX chairman Maurice Newman to investigate its conduct prior to the June 7 controversy, 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 huge toll on Newcrest's share price throughout June, but many investors seem to think it has reached its bottom, with the stock rising by about 20 per cent over the past two trading weeks.