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First Continuous Disclosure Breaches for 2023

Thursday 19 January 2023

Continuous Disclosure Breach

2023 has seen its first breach of the continuous disclosure obligations.
Eight months after the securities and investments regulator commenced enforcement action against Australian Mines Limited will pay $450 000 for three breaches in their continuous disclosure obligations.
The Australian Securities and Investments Commission (ASIC) outgoing Commissioner Sean Hughes said in an official statement, " A contravention of continuous disclosure laws has the potential to undermine investor confidence and the integrity of the market. ASIC will continue to take enforcement action to ensure that Australia's markets operate fairly and are transparent."
ASIC listed their allegations against the mining company:

  • the mining company failed to disclose a 15 per cent agreement in the offtake agreement
  • Mislead investors about the sources of funding; and
  • did not disclose the true value of the offtake agreement
Midway Limited, a wood-fibre processor, paid $33 000 in response to an infringement notice for failing to comply with its continuous disclosure obligations.
ASIC alleged that a year ago the Australian company failed to report an almost 40 per cent drop in their half-year results.
Enduring Priorities and Enduring Priorities
Continuous disclosure breach was a key item listed in their enduring priorities since misconduct can have a detrimental impact on market integrity and investor confidence.
Australian Mines was the second mining company to have enforcement action brought against them last year after Rio Tinto.
Rio Tinto paid a penalty of $750 000 for continuous disclosure breaches in 2012 and 2013.
The proceedings took place after the regulator and the f-mining company filed joint penalty proceedings.
Trust in the Australian market was a key concern for the regulator.
ASIC Deputy Chair Sarah Court said in an official statement at the time, "Rio Tinto had obligations to the market to keep it adequately informed about its mining projects overseas.
Court added, "When Rio Tinto was aware of information that Rio Tinto Coal Mozambique was no longer economically viable as a long-life, large-scale, Tier 1 coking coal resource, the market should have been properly informed in a timely manner."
Regulatory cooperation
International Regulatory cooperation was a key feature in both enforcement matters. For Australian Mines Limited, ASIC was by the UK's Financial Conduct Authority (FCA)and the South Korean Financial Commission.
The Rio Tinto matter was investigated with the cooperation of the UK's FCA and the US Securities Exchange Commission (SEC).