WHITEHAVEN Coal has joined Australia's corporate watchdog in investigating the potential for legal recourse against the man whose hoax temporarily wiped more than $314 million off the value of the company.
The hoax, by anti-coal campaigner Jonathan Moylan, tricked investors into thinking that a recent $1.2 billion loan arranged by ANZ for Whitehaven had been cancelled on ethical grounds.
The incident is the third time in six months that trading on the Australian Securities Exchange has been influenced by a hoax, and leading corporate lawyer Simon Rear said it was time that a strong disincentive was provided to other hoaxsters.
"There probably needs to be some more examples made of people and I think that's probably what ASIC will try to do," he said.
"Legislation is only as strong as it can be enforced, and it is always enforced after the fact."
Retail giant David Jones was drawn into a takeover hoax in July, while contractor Macmahon Holdings was also the subject of a hoax in October.
Mr Moylan's hoax was presented as a press release from ANZ and was reinforced by Mr Moylan taking media phone calls while pretending to be a member of the bank's communications staff.
Shares in Whitehaven, which counts struggling coal baron Nathan Tinkler as its biggest shareholder, fell from $3.52 to $3.21 in rapid time before the stock was put into a trading halt.
By mid-afternoon the share price had recovered and the stock closed only 2¢ lower at $3.50.
But those investors who sold their shares at the lower prices appear to have lost their money, with the ASX confirming the trades would not be cancelled.
Whitehaven managing director Tony Haggarty said the company would look at all options to protect its shareholders. "Whitehaven will liaise with the ASX and ASIC in relation to Mr Moylan's irresponsible and ill-conceived conduct and trusts those authorities to take the appropriate action," said Mr Haggarty.
"Whitehaven is also investigating any legal action that maybe available to it and its shareholders. Whitehaven treats matters such as the fraudulent hoax announcement by Mr Moylan very seriously.
"The integrity of the information provided to the public regarding Whitehaven goes to the heart of the market's integrity and directly effects the price of Whitehaven shares, as well as our many shareholders."
Mr Tinkler declined to comment.
ASIC said its initial enquiries would focus on section 1041E of the corporations act which refers to false or misleading statements.
"If there appears to be a breach, ASIC will investigate and take timely and appropriate action," said an ASIC spokesman.
"Market integrity is fundamental to what we do and if we detect any potential breaches of the law or Market Integrity rules we will take timely and appropriate action."
Mr Rear said criminal liability can prevail under section 1041E, while civil liability was covered by a similar clause of the corporations act: provision 1041H.
ANZ, whose corporate logo was involved in the hoax, said it would co-operate with ASIC's investigations, but Mr Rear said the bank may have avenues of recourse under intellectual property laws.
"As a big four bank their reputation is paramount, so they may look to go after this person as well, but there is really only civil damages and loss that they can go after," he said.