REX: slap from ASIC for flouting continuous disclosure rules on capital city routes
The Australian Securities and Investment Commission (ASIC) has judged that REX (Regional Express Holdings Limited) did not meet its responsibilities under the rules of continuous disclosure, because of an article in the Australian Financial Review which through an interview with Chairman John Sharp disclosed that the airline was considering the feasibility of commencing domestic operations – flying between capital cities.
The airline had not disclosed this information to the market through normal channels, and as a result the Australian Securities Exchange (ASX) placed REX in a trading halt on 12 May 2020.
REX then released a statement the next day essentially confirming the information in the AFR article, which when trading recommenced saw the share price increase by 30%.
ASIC has given a firm slap on the wrist, by withdrawing REX’s ability to issue a ‘reduced-disclosure prospectus’ when raising securities:
ASIC considers the ability to use a reduced-disclosure prospectus a privilege that is dependent on compliance with other aspects of the law, including that companies meet their ongoing disclosure obligations.ASIC statement
ASIC’s investigation into REX’s conduct is ongoing, while REX has the option to appeal to the Administrative Appeals Tribunal for a review of the ASIC decision.
This was a basic error that a professional chairman should not have made.
Sometimes the charm of the press is irresistible?