Friday, 25 October 2013

The charade: A guide to answering ASX price queries

Australian regulators have a zero enforcement policy regarding share price manipulation, with ASIC never intervening against share price ramps. The only consequence for companies deliberately ramping their share price is a potential ASX price query, a form letter asking if the company is aware of any undisclosed information that could explain recent price movements. Every single time this occurs, the company in question then replies that it has no idea whatsoever what could have caused the price movement. And that's it. Since all replies to ASX queries are essentially identical, the whole exercise is just a charade, with absolutely no point. Included below is a standard response that ASX instead could complete and send to itself. This would save everyone time and have the same (non-existent) benefit as the current charade.
Dear ASX, 
Thank you for your letter dated [insert date] regarding a change in volume and price of shares in [insert company name]. In reply to your questions:
1. The company is not aware of any information concerning it that has not been announced, which if known could be an explanation for recent trading in the company's securities.
2. Not applicable.
3. No.
4. The company confirms it is in compliance with the listing rules and in particular with listing rule 3.1. 
Yours faithfully, [insert name].
This form letter could be used by ASX in every instance. MNW provides a nice example of how this works. Ramped 1000% in three months, MNW issued shares and options starting at $0.10 to accomplices. These accomplices then ramped the share price above $0.40. The management of MNW not only knew the reason for the ramp, but had engineered it themselves, yet when queried by ASX supplied the following response:

Next time, Elvis could just fill out the standard response and send it to himself, with identical end result.

1 comment:

  1. Cynical but unfortunately accurate view for a lot of these announcements