Private briefings given by gold producer Newcrest have cost the mining company $1.2 million in fines as corporate watchdog ASIC enforces rules on fair disclosure of corporate and potentially market-moving information.
The case centres on information about Newcrest management’s expectations for FY14 gold production of 2.2 million ounces to 2.3 million ounces and capital expenditure of about $1 billion.
The trouble with this is that the market-sensitive information was given to analysts in May 2013 before it was disclosed to the wider market in June.
According to a Deed of Settlement between Newcrest and ASIC, the briefings were set against the backdrop of a dramatic fall in the price of gold which went from $1,580 per ounce to $1,360 per ounce and remained volatile throughout the 2013.
The briefings centred around the Goldman Sachs’ inaugural Gold Day conference in Sydney on May 30, 2013.
In the wings of the conference the Melbourne-based Newcrest set up meetings between Sydney-based analysts and Spencer Cole, Newcrest’s Manager of Investor Relations.
The first analyst Cole briefed was from Credit Suisse (Michael Slifirski) on May 28, followed by UBS (Jonathan Battershil) and CLSA (David Thompson) on May 29.
On May 30 Cole spoke to Deutsche Bank (Brett McKay and Matt Hocking), Citibank (Daniel Seeney, Matthew Schembri and Sam Heithersay), RBC (Michael Orphanides) and Macquarie (Mitchell Ryan).
Cole told them Newcrest expected its FY14 gold production to be about 5% per annum above its revised FY13 gold production guidance.
Newcrest has admitted the contraventions and agreed for the Federal Court to decide civil penalties, expected to be $800,000 and $400,000, a total of $1.2 million.
ASIC is still investigating into relation persons who received the information.
ASIC Commissioner Cathie Armour said: “Companies should have regard to existing guidance in the market about how to conduct briefings to ensure confidential, market-sensitive information is not selectively disclosed.”
Newcrest Chairman Peter Hay said:
“Newcrest takes its disclosure obligations very seriously and sincerely regrets the contraventions. Newcrest has cooperated fully with ASIC in its investigation of these matters.”
One of the talking points in the market is the good access analysts get in Australia, which has one of the world’s toughest disclosure regimes, to senior executives of ASX-listed companies.
Companies are subject to the continuous disclosure obligations in section 674 of the Corporations Act 2001. This imposes a statutory obligation on companies to comply with listing rules of the ASX.
A company must immediately tell the ASX when it becomes aware of information which could have a material effect on the price or value of shares.
In May 2014 ASIC released a report following a review of how companies and their advisers handle confidential information.
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