Australia: Too much vs too little: How do companies keep a balance on the disclosure tightrope?

Striking the right balance on what can be a fine line requires sense and skill.

In recent weeks we have seen some quite interesting comments from ASIC on the subject of "selective disclosure". Of course some of this is off what has become the cause celebre around Newcrest and there's no doubt that ASIC is increasing the level of intensity in terms of its communication with the market about the importance of market integrity to ordinary consumers and to the market in general.

And it fits with the theme we've seen the ASIC Commissioner Greg Metcalf make on a couple of occasions around the importance of gate keepers. And in that context he looks at gate keepers as being those individuals who are really monitoring and managing the way that companies interact with the markets.

In this case we saw Kathy Armour the newest ASIC Commissioner talking about selective disclosure and the fact that ASIC will be sitting in on a pretty regular basis on analysts briefings by companies.

Of course this is alleged to be the area where Newcrest got into trouble when a number of market participants claimed that there was wider knowledge in the market about their proposed large write-down than was generally available by virtue of their ASX releases.

The interesting question of course for companies is how you manage that problem and there's no doubt the companies run down a very fine line of, do I know enough to make a sensible disclosure about what's going on in my business and what changes might be taking place (for example a large write-down or a piece of litigation that was as yet unresolved), and keeping the market informed.

And there's no doubt that if after the event when you announce for example a large write-down in the value of an asset that you will find yourself in the frame from either the plaintiff bar or alternatively from the regulator.

And I guess the answer for people to think about is that there is a way through and there is an answer around managing disclosure and isn't it absolutely the case that there's no contact between you and analysts or you and the media. – what you need to do is to be nuanced and careful about what you are doing and ensure that at all times, although you may be dealing with levels of details that are underneath the information you provide, the information essentially reflects that information that you already have in the market.

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