ASIC Releases Guidance To ASX Listed Entities on Analyst and Investor Briefings

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ASIC has today released ASIC Report 393: Handling of Confidential Information, which deals with the release of confidential information by ASX listed entities in investor and analyst briefings and unannounced corporate transactions.

You may recall that in July 2013, ASIC made overtures about sitting in on investor briefings to crack down on their potential to leak market-sensitive information and to facilitate insider trading. In the process of developing the Report, ASIC did just that.

Over the past 12 months ASIC researchers have sat in on a number of company briefings in order to examine current market practices regarding the management of confidential, market-sensitive information.

They also examined media articles produced in advance of market-sensitive announcements to determine if the analyst and investor briefing practices increased the risk of pre-ASX announcement leaks to the market.

Key Findings

Given that ASIC’s presence in the briefings was bound to ensure that everyone was on their best behaviour, it is no surprise that they did not find any evidence of companies leaking confidential and insider information to analysts or investors.

ASIC’s key finding was that the practice of analyst and investor briefings can be improved. Whilst the entities that it observed and spoke to had various levels of documentation and policies about handling confidential information, compliance with and training of these policies varied markedly.

What’s next for ASIC?

Aside from the usual emphasis on entities improving their practices, managing their risks and familiarising themselves with guidelines, ASIC intends to continue to review industry practice, and to continue enforcement actions.

Whilst they will ‘focus’ on analyst and investor briefings, they will continue to use their market surveillance and other investigatory tools to maintain confidence in the market. The recent spate of insider trading prosecutions emphasises their focus in this area.

What does this all mean for you?

The Report does not outline any drastic changes that listed entities should be making, but it does send the message that if your continuous disclosure and securities trading policies and procedures are not up to scratch, you are placing your company at risk.

ASX listed entities should ensure that they have policies, procedures (and critically training) in place to ensure that:

  • Staff are familiar with Governance Institute and AIRA guidelines.
  • Staff are aware of their obligations to restrict confidential information.
  • Staff comply with continuous disclosure obligations under the ASX Listing rules and the Corporations Act.
  • Investor and analyst briefings are held in a way that does not privilege one group over another (for instance, by ensuring advanced notice of briefings and publishing briefing materials).
  • Confidential and market sensitive information is restricted, and records are kept about who has access to this information, including which analysts and investors have been briefed.
  • They are well prepared to respond to, and investigate leaks.

ASIC also emphasised that small to medium cap entities cannot over-rely on their advisers to deal with their approach to disclosure for them.

The bottom line is that ASIC does not want to just see evidence of general policy, they want to see that companies are maintaining best practice in relation to transaction-related confidential, market sensitive information.

The full report is available on the ASIC website.

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