The Australian Securities and Investments Commission (ASIC) today announced its win against Australia and New Zealand Banking Group Limited (ANZ) in a disclosure case.

The Federal Court today found ANZ breached continuous disclosure laws when undertaking a $2.5 billion institutional share placement in 2015 by failing to disclose a material shortfall in placement subscriptions allocated to underwriters.

The decision confirms that a significant take-up of shares by underwriters in a capital raising may be considered price sensitive information requiring market disclosure.

The Court found that ANZ contravened continuous disclosure laws by failing to notify the Australian Securities Exchange (ASX) that between approximately $754 million and $791 million of the $2.5 billion of ANZ shares offered in an Institutional Placement was to be acquired by its underwriters rather than placed with investors.

When handing down judgment, Justice Moshinsky concluded that the information was material. Justice Moshinsky stated that he accepts ‘ASIC’s contention that, if the pleaded information had been disclosed, persons who commonly invest in securities would have held an expectation that the Underwriters would promptly dispose of allocated or acquired Placement shares, and in so doing place downward pressure on ANZ’s share price.’

ASIC will now make submissions on appropriate penalties. Judgment by the Court on appropriate penalties will be determined on a date yet to be set.