Court Win For Regulator
Sydney Morning Herald
Saturday July 5, 2008
THE Australian Securities and Investments Commission has succeeded in overturning a November court judgment that had raised concerns in legal circles about the regulator's ability to police misleading stock exchange announcements.
The case involves a memorable September 2005 claim by Citrofresh International Ltd that it had developed a disinfectant spray capable of stopping the spread of the HIV virus. The share price trebled the day the statement was released but later lost the gains. Last year Citrofresh and ASIC signed a statement of agreed facts in the Federal Court, in which the company admitted to a false statement that could affect trading in its shares. The regulator lost a related action against Citrofresh's chief executive, Ravi Narain.Justice Alan Goldberg ruled ASIC had failed to prove Mr Narain's involvement in issuing the statement. Nor had it proved the statement related to "a financial product" as required by the Corporations Act, he said. Justices Ray Finkelstein, Peter Jacobson and Michelle Gordon set aside those findings on Thursday and ordered the case be reheard. The ASIC commissioner Belinda Gibson said yesterday the appeal decision "removes a serious question over the scope" of the law. Several law firms had advised clients not to set too much store by Justice Goldberg's decision.Blake Dawson consultant Elizabeth Boros had advised: "Citrofresh should not be seen as a general authority that officers can avoid liability for the company's misstatements."
© 2008 Sydney Morning Herald