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How ASA helped bring about Australia's first corporate insider trading conviction

By ASA director Stephen Mayne

After the Spanish-German concern ACS-Hochtief released this notice of its increased shareholding in construction giant Leighton to the ASX on February 5, 2014, then ASA policy and engagement co-ordinator Stephen Mayne (now an ASA director) sent the following email to Matthew Gibbs, general manager for ASX media and communications, early the next morning:

Hi Matthew,

Could you please pass this complaint onto the relevant people at ASX who in turn could on pass to the relevant people at ASIC.

Leighton is due to release its full year result on February 20 and the controlling shareholder has just spent about $60 million buying another 1% of the company, as per this announcement to the ASX yesterday:

Seeing as Hochtief has board representation at Leighton, I would have thought trading blackouts should apply.

Is there some sort of carve out for a corporate shareholder as opposed to directors, because it doesn’t seem right that a party with inside information on the forthcoming result can purchase shares so soon before making a material earnings release to the market.


Stephen Mayne
Policy and Engagement Co-Ordinator
Australian Shareholders’ Association

The email was also sent to Australian Financial Review journalist Jenny Wiggins, who ran with the story the next day.

Hochtief initially responded by releasing this letter ( to the ASX denying it had done anything wrong, but two years later it effectively negotiated a deal with ASIC and pleaded guilty to insider trading, albeit claiming it was “inadvertent”.

ASIC’s 26-page agreed statement of facts with Hochtief provides a rare insight into the workings of boards, shares dealings and information flows.

Having attended an audit committee meeting on January 14, 2014, which informed them that Leighton would be announcing a better-than-expected net profit of $583 million on February 20, the Hochtief representatives on the Leighton board should have immediately cancelled the buy orders on the Leighton shares.

Instead, they ploughed on, picking up stock at around $16, which has proved a very tidy investment with CIMIC (Leighton has been renamed) now trading at more than $30.

Confirmation that the 2014 profit was surprisingly good came with the market reaction on February 20, 2014. ASA responded by pro-actively contacting journalist Damon Kitney at The Australian newspaper who then contacted ASIC and produced a story at the time.

Here are the comments which ASA’s Stephen Mayne provided to Damon Kitney in an attempt to further progress the issue and trigger an ASIC investigation:

 “Once the Hochtief directors on the Leighton board became aware that the December half result was tracking ahead of market expectations, they should have immediately taken steps to ensure Hochtief ceased buying any further shares until after the earnings release.”

“As it stands, Hochtief bought 3.42 million shares between December 30 and February 6 at an average price of $16.15. After the stock soared to $17.21 on the back of the full year result, this $55.24 million investment was showing a profit of $3.62 million.”

“When you consider that Hochtief is represented on the Leighton board by its CEO and CFO, the argument that they were unaware of the timing of the share purchase stretches credulity. They were certainly in a position to ensure such trades didn’t happen.”

“The ASA calls for Hochtief to provide more information to ASIC on the instructions given to the “third party” to purchase the shares and ASA is also seeking a clear undertaking from Hochtief that it will not purchase any more Leighton shares outside the normal trading windows which the directors themselves must comply with.”

ASA believes ASIC should be congratulated for picking up and running with this issue, notching up its first successful prosecution of a corporate entity for insider trading. And it might not have happened at all if journalists like The AFR’s Jenny Wiggins and The Australian’s Damon Kitney hadn’t helped shine a light on the situation.

There has been a lot of media coverage on the outcome which can be viewed on our ASA in the media page. (

And here are links to some of the individual stories which were published after it was revealed ASA would be receiving $103,400 of the $400,000 Hochtief fine:

Fairfax article (

Courier Mail article (


Click here to access the ASA's media release distributed on 9 December.



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