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ASIC says DJs action okay

Reported by AAP
Tuesday, March 20, 2012
Topics in this article:
David Jones,Leighton Holdings
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The corporate regulator's boss says David Jones' decision to go into a trading halt was justified if the alternative was an uninformed market trading in its shares.

The retailer on Monday surprised the market by halting trading in its shares amid reports it would post a drop of as much as 50 per cent in financial services earnings.

The move raised concerns about knee-jerk reactions after the Australian Securities and Investment Commission (ASIC) last week hit Leighton Holdings with a $300,000 fine over a shock $900 million earnings downgrade in April 2011.

ASIC chairman Greg Medcraft said he did not have a problem with David Jones' decision, despite the expected downgrade in credit card earnings being flagged already.

The troubled retailer will release its half year results on Wednesday.

"The listing rule at the end of the day says immediately you disclose," Mr Medcraft told reporters following a business lunch.

"Then if for some reason you can't disclose, if the market isn't trading on fair information then basically the company taking a decision that trading should halt is probably a reasonable course of action."

Mr Medcraft told the Australian Institute of Company Directors lunch the Leighton's case was a timely warning to directors that their companies had to comply with disclosure obligations.

Australians had to have trust and confidence in the market and that companies met their obligations.

"What does a reasonable person think immediately means ... I think to most Australians immediately means immediately," he said.

Leighton's board had allowed trading in their shares for three weeks before telling the market about the turnaround.

Mr Medcraft defended what some saw as a small fine for Leighton, saying that it was better not to let the case drag on in court for years, pointing out the engineering company also faces enforceable undertakings over compliance.

However Mr Medcraft has said since imposing the punishment - the maximum available - that he wants larger penalties such as those available in the US for companies that do not immediately disclose price-sensitive information.

He also told the directors' lunch they must be more accountable, in light of the shareholder class action action against the Centro group whose directors did not pick up the company's massive debts.

"Directors have responsibilities and can't delegate and need to have the scepticism to challenge what's presented to them by management," he said.

24/09/2014 10:23Sydney, Australia. 24 September,2014
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