By Michael Hansel, Partner; Brian Moller, Partner;
Nicole Radice, Partner; Michele Muscillo, Partner; Michelle
Eastwell, Partner and Richard Hanel, Associate
Two recent events have illustrated the increase in trading
surveillance by ASIC since it assumed market supervision from ASX
in August last year:
the release of ASIC's report into market supervision for
the first half of 2011; and
the prosecution of an employee of a "proxy
solicitation" business owned by Computershare.
Here, Associate Richard Hanel looks at these two events in
What are the key points you need to be aware of?
Companies must be vigilant in adopting and implementing trading
policies in the wake of increased ASIC scrutiny and the number of
matters referred to ASIC's Deterrence Team.
The increased focus and use of technology by ASIC means that
persons who elect to participate in insider trading now run a much
greater risk of being caught.
All companies need to ensure that there policies and practices
surrounding the handling of price sensitive information and trading
in securities of the company are reviewed regularly and reinforced
throughout employees of the company.
Refer to ASIC's
Consultation Paper 128 for best practice principles if you have
concerns regarding the manner in which price sensitive information
is being handled within your company.
ASIC's report into market supervision
Just prior to the first anniversary of ASIC assuming market
supervision from the ASX, ASIC released its report into market
supervision for the first half of 2011. The report's results
The number of matters referred to ASIC's Deterrence Team
has doubled from the first 5 months of supervision, with 35
referrals during the last 6 months;
Of the 35 referrals, half of these were for insider trading;
ASIC has worked towards reduction of the time taken to commence
investigations with 21 of the 52 matters referred to its Deterrence
Team during the first 11 months of supervision being within 30 days
Credit for this increase in referrals is attributed to new the
employment of ASIC's own SMARTS technology system.
Through these monitoring activities, ASIC has observed an
increase in referrals in relation to the potential misuse of
confidential information by persons engaged to assist in M&A
and other corporate transactions, such as investment bankers, law
firms and consultancy firms.
Employee prosecution for "proxy solicitation"
Hot on the heels of the ASIC report came the prosecution of an
employee of a "proxy solicitation" business owned by
Computershare. The employee used confidential information obtained
through the course of his job to acquire shares in four different
companies immediately prior to each company making significant
announcements regarding corporate deals. This was the seventh
prosecution for insider trading in the last eighteen months, with
four of those prosecutions relating to financial
Best practice principles to prevent insider trading
In late 2009, ASIC released
Consultation Paper 128 outlining its views with respect to best
practice principals that companies could look to adopt for the
purposes of controlling the use of confidential information. While
ASIC have decided to spread the message on these matters through an
educational approach in place of the release of an official
Regulatory Guideline, the Consultation Paper still serves as a
handy guide as to the types of action that companies can take so as
to ensure that the number of people who come into contact with
price sensitive information is minimised. It also takes steps to
ensure that those who do come into possession of price sensitive
information are aware of their obligations in relation to handling
and dealing with that information. This Paper should be utilised if
you have concerns regarding the manner in which price sensitive
information is being handled within your company.
If you require information regarding the prohibition on insider
trading or the handling of price sensitive information within your
company, please contact our Corporate Advisory and Governance
This part will cover the legal position in relation to promotional materials and misleading and deceptive conduct.
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