In a noteworthy episode of corporate regulation, the Federal Court of Australia has imposed a $900,000 fine on ANZ Bank for non-compliance with continuous disclosure obligations during its $3 billion capital-raising drive in 2015. The bank had failed to disclose that underwriters Citigroup, JPMorgan, and Deutsche Bank had taken up a substantial $790 million shortfall from the capital raising.
A Serious Breach
Justice Mark Moshinsky, presiding over the case, accentuated the gravity of ANZ's non-disclosure. He stated that the information was pivotal to ANZ's share price and should have been revealed to retail investors before proceeding with a subsequent $500 million share purchase plan. The non-disclosure was deemed a significant oversight that could mislead potential investors and distort the market's perception of the bank's financial health.
ASIC's Stern Warning
The Australian Securities and Investments Commission (ASIC) deputy chairwoman Karen Chester described the fine as a stern warning to other listed companies about the importance of continuous disclosure. The case underscores the necessity for transparency, particularly when it involves substantial financial transactions that can influence a company's position in the market.
Implications for Corporate Regulation
The case marks a significant moment in corporate regulation, reinforcing that the take-up of shares by underwriters must be disclosed to investors and the market at large. The penalty could have been significantly higher under current legislation, with potential fines ranging from $15 million to $780 million. However, the maximum fine at the time of the breach was limited to $1 million. This discrepancy underlines the need for regulatory bodies to constantly update legislative measures to ensure they reflect current market realities.
This judgement concludes the litigation over this issue for ANZ, which had also faced an ultimately unsuccessful criminal cartel case brought by the Australian Competition and Consumer Commission (ACCC) against ANZ, Citigroup, Deutsche Bank, and several executives over the same capital raising.