Insider Trading
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Insider Trading
So old Rene Rivken was done for Insider Trading and got periodic detention and a sizeble fine because he bought 50,000 Qantas shares on alleged insider knowlege of Qantas' purchase of Impulse Airlines.
Looking back a few months we see a huge spike in the purchasing of Qantas shares. The bulk of people buying them ,allegedly were Qantas directors and senior management.
Just the other day we see Qantas shares rising despite a falling market.
This no doubt due to the latest Jetstar franchise ponzi like scheme announcement in Hong Kong.
These sort of announcements are not thought up overnight.
If any executives have bought shares recently and hence sold after this announcement and made money from said transaction, are they also guilty of Insider trading too ?
Looking back a few months we see a huge spike in the purchasing of Qantas shares. The bulk of people buying them ,allegedly were Qantas directors and senior management.
Just the other day we see Qantas shares rising despite a falling market.
This no doubt due to the latest Jetstar franchise ponzi like scheme announcement in Hong Kong.
These sort of announcements are not thought up overnight.
If any executives have bought shares recently and hence sold after this announcement and made money from said transaction, are they also guilty of Insider trading too ?
The directors usually get a buying window in which they can purchase shares, but yes, if they bought a heap of shares and then dumped them quite quickly they'd be guilty of insider trading.
However, ASIC would have to prove that they made money on information which was not public knowledge. ASIC as a whole is fairly spineless.
The ASX will often issue "speeding tickets" if a stock goes UP with unusual volume without any announcements, however I have yet to see one issued when a stock heads south.
However, ASIC would have to prove that they made money on information which was not public knowledge. ASIC as a whole is fairly spineless.
The ASX will often issue "speeding tickets" if a stock goes UP with unusual volume without any announcements, however I have yet to see one issued when a stock heads south.
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Why risk insider trading when you can milk larger bonuses and salaries, create subsidiaries and squeeze out additional director fees?
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Well aware of the so called protections against insider trading.
The question I'm sure more and more people are asking regarding Qantas is why are the Institutional Investors along with Senior Management and the Board members been trading so heavily of late in Qantas shares?
Share price in the basement, no dividends for what, 3 years now?
What are the Institutional Investors being told ,if anything, that the mom & pop investors aren"t?
Share blackout periods of what, 4 weeks in some instances, hardly protects against using insider knowledge not available to the mug punter or should I say ,trader when business deals of the magnitude we've seen of late by Qantas taking months, if not years to stitch together.
My question still stands,When is Insider Trading, Insider tading?
Directors side-step tough rules on trading in blackout periods
CONCERNS mount that new rules may not stamp out the widespread practice among directors of trading shares during sensitive blackout periods.
The concern follows the Australian Securities Exchange disregarding a key recommendation of a government advisory committee, made up of highly regarded legal experts.
From January 1, listed companies will be required to adhere to policies stipulating when directors and key managers are permitted to deal in their own shares.
But instead of being subject to a uniform restriction on actively trading during a blackout, typically defined as the time between the end of an entity's financial period and the release of its results, boards will be permitted to continue to determine the contents of their own policies.
The new listing rules follow an ASX audit that revealed 41 per cent of on-market share trades by directors during the first quarter of 2010 occurred within a blackout.
They also follow a recommendation from the federal government's Corporations and Markets Advisory Committee that directors should not be permitted to deal in the securities of their companies during blackout periods.
CAMAC noted in its Aspects of Market Integrity report, issued in June last year, that although there was a high level of trading by directors during blackouts, few of those trades actually contravened their companies' trading policies.
"Current governance recommendations call for a company to disclose its blackout trading policy to the market, but leave the content of that policy to the company," the report said.
"Variable approaches to the length of blackout periods . . . do not promote market confidence.
"As a matter of good governance and in the interests of market integrity, there should be a more prescriptive approach to the trading by directors and executive officers in the securities of their company during sensitive periods."
But despite this recommendation, the ASX has opted to leave it up to companies to determine when their directors can or cannot actively trade, which is currently the case under the voluntary corporate governance guidelines that require them to have a trading policy or explain "if not, why not?".
At a minimum, trading policies will be required to spell out periods when trading is not permitted, referred to as "closed periods", restrictions on trading and trading activities that are not subject to the policy, such as dividend reinvestment plans.
And policies will detail any exceptional circumstances, such as financial hardship, in which trading can take place at an otherwise prohibited time and the procedures for obtaining clearance for doing so.
Further to that, directors' interest notices that are issued to the market after a transaction, will be required to state whether a trade occurred during a closed period.
But it is understood several CAMAC members are concerned about the discrepancy between their recommendation for a blanket restriction on blackout trading and the flexibility of the new rules.
While not illegal, trading during a blackout period is widely considered poor corporate governance because it can create a perception of insider trading.
Peter Hunt, chairman of corporate adviser Greenhill Caliburn, said insiders should be required to adhere to restricted trading during a blackout period, which should be defined, as a bare minimum, as the period from the end of a financial period to the release of results.
"It's just common sense," he said. "I am amazed that the ASX frankly can't take a deep breath and make a clear ruling on this because the problem with leaving it up to companies to decide is that the good companies will adopt a sensible blackout period, but it's the others we need to worry about."
Erik Mather, managing director of governance research firm Regnan, said the fact more than two-thirds of directors' trading was still occurring between the close of books and the public release of results defied logic, especially given the legal and reputational risks.
"We started talking about blackout trading back in 2004 or 2005, so if we sound a little tired about this issue you'll have to excuse us," he said.
"We just find it surprising that it's an issue that hasn't already been fixed."
Although Mr Mather said the ASX had made some progress, evidenced by the reduction in blackout trading in companies at the top end of town, there was still a long way to go.
"There ought to be a reverse burden of proof to sort this issue out," he said. "The director who trades during such a period is an insider trader unless they can prove otherwise."
CAMAC has recommended possible legislation to stamp out the practice.
Although most companies are still to comply with the new listing rules -- only 16 of almost 2200 listed entities have so far published their updated policies -- it is clear that content differs dramatically from group to group.
Transurban's policy includes restrictions on short-term dealing, hedging unvested entitlements and margin loans.
It defines its "closed period" as the time between the close of books and three days after interim and annual results have been issued, allowing the market time to digest the information.
Coca-Cola Amatil takes a more restricted approach, with trading by directors and key managers generally prohibited except in the four weeks from the day after results and following the annual meeting.
At biotech company Acuvax, employees cannot have more than one stockbroker trade on their behalf, and green technology developer Bluglass requires senior staff to obtain approval before any planned share transaction.
Although the ASX declined a number of requests for an interview with chief compliance officer Kevin Lewis, it has defended its new listing rules.
ASX spokeswoman Leeanne Bland said the rules provided a proportionate and balanced response to market integrity issues associated with blackout trading, and allowed companies the flexibility to set appropriate rules for their circumstances.
"This approach provides the flexibility for mining explorer companies to prescribe prohibited periods appropriate to their entities, where the standard blackout periods . . . may not be relevant given that they are not revenue or profit-generating entities," she said.
"However, it is expected that the larger listed entities will adopt a more restrictive . . . approach and that the smaller listed entities (that are not mining explorers) will likely adopt trading prohibitions during the standard blackout periods. The additional transparency and market scrutiny that the disclosure requirements will facilitate are expected to incentivise and drive the adoption of robust trading policies to achieve the regulatory outcomes sought."
The new rules have been welcomed by the Australian Shareholders' Association and Chartered Secretaries Australia.
"The problem is not the narrow definition of a blackout period, (but that) some directors have continued to contravene their company's policies," CSA chief Tim Sheehy said. "And one real issues is to get companies to have trading policies, as not all companies have them."
The question I'm sure more and more people are asking regarding Qantas is why are the Institutional Investors along with Senior Management and the Board members been trading so heavily of late in Qantas shares?
Share price in the basement, no dividends for what, 3 years now?
What are the Institutional Investors being told ,if anything, that the mom & pop investors aren"t?
Share blackout periods of what, 4 weeks in some instances, hardly protects against using insider knowledge not available to the mug punter or should I say ,trader when business deals of the magnitude we've seen of late by Qantas taking months, if not years to stitch together.
My question still stands,When is Insider Trading, Insider tading?
Directors side-step tough rules on trading in blackout periods
- by: Rebecca Urban
- From:The Australian
- November 25, 201012:00AM
CONCERNS mount that new rules may not stamp out the widespread practice among directors of trading shares during sensitive blackout periods.
The concern follows the Australian Securities Exchange disregarding a key recommendation of a government advisory committee, made up of highly regarded legal experts.
From January 1, listed companies will be required to adhere to policies stipulating when directors and key managers are permitted to deal in their own shares.
But instead of being subject to a uniform restriction on actively trading during a blackout, typically defined as the time between the end of an entity's financial period and the release of its results, boards will be permitted to continue to determine the contents of their own policies.
The new listing rules follow an ASX audit that revealed 41 per cent of on-market share trades by directors during the first quarter of 2010 occurred within a blackout.
They also follow a recommendation from the federal government's Corporations and Markets Advisory Committee that directors should not be permitted to deal in the securities of their companies during blackout periods.
CAMAC noted in its Aspects of Market Integrity report, issued in June last year, that although there was a high level of trading by directors during blackouts, few of those trades actually contravened their companies' trading policies.
"Current governance recommendations call for a company to disclose its blackout trading policy to the market, but leave the content of that policy to the company," the report said.
"Variable approaches to the length of blackout periods . . . do not promote market confidence.
"As a matter of good governance and in the interests of market integrity, there should be a more prescriptive approach to the trading by directors and executive officers in the securities of their company during sensitive periods."
But despite this recommendation, the ASX has opted to leave it up to companies to determine when their directors can or cannot actively trade, which is currently the case under the voluntary corporate governance guidelines that require them to have a trading policy or explain "if not, why not?".
At a minimum, trading policies will be required to spell out periods when trading is not permitted, referred to as "closed periods", restrictions on trading and trading activities that are not subject to the policy, such as dividend reinvestment plans.
And policies will detail any exceptional circumstances, such as financial hardship, in which trading can take place at an otherwise prohibited time and the procedures for obtaining clearance for doing so.
Further to that, directors' interest notices that are issued to the market after a transaction, will be required to state whether a trade occurred during a closed period.
But it is understood several CAMAC members are concerned about the discrepancy between their recommendation for a blanket restriction on blackout trading and the flexibility of the new rules.
While not illegal, trading during a blackout period is widely considered poor corporate governance because it can create a perception of insider trading.
Peter Hunt, chairman of corporate adviser Greenhill Caliburn, said insiders should be required to adhere to restricted trading during a blackout period, which should be defined, as a bare minimum, as the period from the end of a financial period to the release of results.
"It's just common sense," he said. "I am amazed that the ASX frankly can't take a deep breath and make a clear ruling on this because the problem with leaving it up to companies to decide is that the good companies will adopt a sensible blackout period, but it's the others we need to worry about."
Erik Mather, managing director of governance research firm Regnan, said the fact more than two-thirds of directors' trading was still occurring between the close of books and the public release of results defied logic, especially given the legal and reputational risks.
"We started talking about blackout trading back in 2004 or 2005, so if we sound a little tired about this issue you'll have to excuse us," he said.
"We just find it surprising that it's an issue that hasn't already been fixed."
Although Mr Mather said the ASX had made some progress, evidenced by the reduction in blackout trading in companies at the top end of town, there was still a long way to go.
"There ought to be a reverse burden of proof to sort this issue out," he said. "The director who trades during such a period is an insider trader unless they can prove otherwise."
CAMAC has recommended possible legislation to stamp out the practice.
Although most companies are still to comply with the new listing rules -- only 16 of almost 2200 listed entities have so far published their updated policies -- it is clear that content differs dramatically from group to group.
Transurban's policy includes restrictions on short-term dealing, hedging unvested entitlements and margin loans.
It defines its "closed period" as the time between the close of books and three days after interim and annual results have been issued, allowing the market time to digest the information.
Coca-Cola Amatil takes a more restricted approach, with trading by directors and key managers generally prohibited except in the four weeks from the day after results and following the annual meeting.
At biotech company Acuvax, employees cannot have more than one stockbroker trade on their behalf, and green technology developer Bluglass requires senior staff to obtain approval before any planned share transaction.
Although the ASX declined a number of requests for an interview with chief compliance officer Kevin Lewis, it has defended its new listing rules.
ASX spokeswoman Leeanne Bland said the rules provided a proportionate and balanced response to market integrity issues associated with blackout trading, and allowed companies the flexibility to set appropriate rules for their circumstances.
"This approach provides the flexibility for mining explorer companies to prescribe prohibited periods appropriate to their entities, where the standard blackout periods . . . may not be relevant given that they are not revenue or profit-generating entities," she said.
"However, it is expected that the larger listed entities will adopt a more restrictive . . . approach and that the smaller listed entities (that are not mining explorers) will likely adopt trading prohibitions during the standard blackout periods. The additional transparency and market scrutiny that the disclosure requirements will facilitate are expected to incentivise and drive the adoption of robust trading policies to achieve the regulatory outcomes sought."
The new rules have been welcomed by the Australian Shareholders' Association and Chartered Secretaries Australia.
"The problem is not the narrow definition of a blackout period, (but that) some directors have continued to contravene their company's policies," CSA chief Tim Sheehy said. "And one real issues is to get companies to have trading policies, as not all companies have them."
