This is a large and growing element of short sellers that deliberately target companies and concoct misleading information about them to manipulate the share price so asking them to be a good chap its just contrary to their intentions.
But others in the market welcomed the changes.
This is the first time our regulator has adopted the language of those critical of this conduct, short and distort, said Leon Zwier, a partner at Arnold Bloch Leilber, who has advised a large number of ASX-listed groups.
It signals increased regulatory activity to stop illegal share manipulation. Its about time.
Groups operating in the sector hit back at the recommendations saying they were ill-considered and that Australian regulators were behaving like German regulators that pursued short sellers over now-proven allegations of fraud at major European finance house Wirecard.
J Capital Research founder Tim Murray said the advice was not symmetrical in that it targeted negative reports but had no breaks on positive reports by stock spruikers. What ASIC is saying is corporates can put out press releases and sell-side analysis positive reports during trading hours but negative reports only outside trading hours, Mr Murray said.
Positive press releases by corporates are often without detail and cause the stock to increase significantly.
Tim Murray, J Capital Rsearch
ASIC is signalling to corporates they should list in Australia if they want to avoid market scrutiny.
Hong Kong-based GMT Research, which bills itself as a subscription newsletter service rather than an activist short seller, said it did seek input from companies before sending reports to its clients.
Nigel Stevenson, a high-profile analyst at GMT, said his firm felt it already complied with good practice given it publishes its reports after market close and always provides the companies with a list of questions. We also try to avoid unnecessarily inflammatory language, although we do need to be robust, Mr Stevenson said.
