By Michael Hansel, Partner, Liz Cameron, Associate, and, Emily de Boo, Solicitor
ASIC have extended the consultation period that was initially outlined in their Consultation Paper 118 Responsible handling of rumours consultation paper released in September 2009. The extension is for a further six to nine months.
Responses to the 2009 Consultation Paper raised concerns over the costs and benefits that would be associated with proposals to implement specific regulatory rules that define rumours and distinguish those from genuine expressions of opinion to inform price discovery. Further concerns were raised over the potential consequence that the market may be starved of important information as a result of the implementation of specific regulatory rules.
As a result of the feedback that ASIC has received to date, ASIC are extending their monitoring and consultation period for this issue. They will then make a decision on whether and what type of additional regulatory guidance is needed to provide the market with guidance and to improve industry standards for the responsible handling of rumours and management of confidential information.
The Consultation Paper set out principles to assist market participants when handling rumours. However, concerns were raised by CAMAC that confidence in the integrity of Australia's market could be undermined if investors believe rumours are actively spread in the market to distort proper price discovery. Other comments about this Consultation Paper also raised concerns with the practical difficulties involved in drafting specific regulatory rules that define rumours and distinguish those from genuine expressions of opinion to inform price discovery.
ASIC has acknowledged that these concerns are in need of further consideration however at this point in time it still holds the view that at a minimum, and in line with practices with other major capital markets (in foreign jurisdictions), Australian Financial Services licensees who are actively involved in the market should consider the following:
- having in place written procedures which provide clear guidance for operational areas involved in the market about how to deal with rumours;
- training employees in the relevant areas about these procedures; and
- monitoring compliance with these procedures and being able to demonstrate compliance with these procedures.
In December 2009 ASIC released Consultation Paper 128 Handling confidential information (CP128) which sought to improve market practices on how listed entities' handled confidential information. This consultation paper proposed best practice guidelines to assist entities to manage information and promote confidence within the market. For further details on CP128 please refer to our previous HG Alert, ASIC proposes guidelines for price sensitive confidential information.
HopgoodGanim will be hosting a breakfast seminar on 2 June 2010 on Handling Price Sensitive Information during Capital Raising. This seminar will discuss the Consultation Paper proposals as well as provide attendees with an overview of the changes proposed by ASIC and ASX, including how and when price sensitive information can and should be used to assist in avoiding the pitfalls associated with disclosure and legislative requirements.
For further information or, to register to attend the complimentary seminar on 2 June 2010, please click here or contact Philipa Kehoe on 07 3024 0104 or email p.kehoe@hopgoodganim.com.au by Friday 26 May 2010.
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