Court rules on ANZ’s alleged $2.5bn disclosure failure

Justice Mark Moshinsky of the Federal Court of Australia found ANZ breached this obligation by failing to notify the Australian Securities Exchange (ASX) prior to commencement of trade of the underwriter acquisition information or the signification proportion information.

Australian Securities and Investments Commission (ASIC) had alleged JP Morgan, Citigroup Global Markets and Deutsche Bank had acquired between $754 and $790 million from ANZ’s $2.5 billion institutional share placements on 6 April 2015.

On the morning of 6 April 2015, ANZ issued a release to the ASX that its share purchase plan would raise a total of $3 billion and shares were placed in a trading halt until the next day.

On 7 August, ANZ issued another release announcing it raised $2.5 billion in new equity capital “through the placement of approximately 80.8 million ANZ ordinary shares at the price of $30.95 per share”.

ASIC’s case alleged ANZ contravened the Corporations Act by failing to notify the ASX that about $791 million of the $2.5 billion in ANZ shares offered in the placement was instead to be acquired by its underwriters rather than with the investors.

Further to this, ASIC contended that if the information had been disclosed, “persons who commonly invest in securities would have held an expectation that the underwriters would promptly dispose of allocated or acquired placement shares, and in doing so place downward pressure on ANZ’s share price”.

It sought a declaration ANZ breached its continuous disclosure obligations and a pecuniary penalty order.

ANZ’s case was that by the time trading resumed on 7 August 2015, the significant proportion information was “widely known” or at least the relevant information “was not material to the price of ANZ shares”.

In its opening submissions filed with the court, ANZ argued ASIC’s identification of relevant information for disclosure was “the wrong information, or at least incomplete”.

The bank added the conclusion that information ANZ had was not material “is reinforced once regard is to be had to the information actually known by ANZ and the totality of information that would need to have been disclosed if a disclosure was in fact made”.

The proceeding will be listed for a penalty hearing at a later date and ANZ said it was "reviewing the judgement".

The maximum penalty is $1 million.

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