Anti-coal activist Jonathan Moylan has admitted to issuing a hoax ANZ press statement that led to a 9 per cent fall in the price of Whitehaven Coal Limited. This would seem a cut and dried case of market manipulation and fraud – covered under the Corporations Act and the Criminal Code. The Corporations Act provides for a maximum penalty of $22,000 and/or five years jail. If Moylan had also engaged in insider trading (for example, short selling Whitehaven shares) the maximum penalty is $220,000 and/or five years jail.
Alternatively, ASIC could pursue Moylan under its civil penalty regime which allows for a fine of up to $200,000 for individuals for both market manipulation and insider trading.
ASIC’s Chairman, Tony D’Aloisio, reflected on the decision of pursuing criminal or civil proceedings in a speech to the Supreme Court of Victoria Law Conference (13 August 2010):
It is open to ASIC to pursue civil penalty proceedings instead of criminal proceedings for these offences [market manipulation and insider trading]. In making that assessment, ASIC weighs up a number of factors and works (under an Memorandum of Understanding (MOU)) with the CDPP.
Civil penalty proceedings have a number of advantages: they can be pursued by ASIC itself and not require another agency (CDPP), and they have (on the face of it at least) a lower standard of proof. In addition, civil penalty proceedings can provide quicker settled outcomes.
Nevertheless, ASIC’s approach in more recent times has been (generally) to pursue criminal proceedings for these offences. Although preparation for such cases takes longer (necessarily so with a high standard of proof and when individual freedom is at issue), ASIC’s view is that criminal proceedings and sanctions, including imprisonment, are what will ‘focus the minds’ of those who may be inclined to stray (so-called ‘general deterrence’).
Not only did Moylan deliberately issue a hoax press release, but he included his own phone number against the name of Tony Kent (an actual ANZ employee) and then impersonated Kent when receiving phone calls. That is outright fraud. More details here.