ASIC Publishes Information Sheet on Activist Short Selling in Australia

The Australian Securities and Investment Commission (ASIC) today released Information Sheet 255 Activist short selling campaigns in Australia (INFO 255), considering the practice of ‘activist short selling’ in Australia and outlining ASIC's expectations to promote market integrity during these campaigns.

According to the announcement, activist short selling involves a person taking a short position in a financial product and then publicly disseminating information directly or through an agent that might negatively impact the price of the product (short report). A short report may, for example, call into question or directly criticise an entity’s finances, management, public disclosures or future prospects.

“Investors expect to transact in a fair and informed market. When activist short sellers provide accurate and meaningful new information, they can have a positive impact on price formation and market integrity as they may counterbalance excessive market optimism. However, activist short sellers can also unfairly distort the price of a target entity’s securities, which is harmful to the integrity of our markets”, ASIC Commissioner Cathie Armour said.

To protect the integrity of Australia’s securities markets, activist short sellers, target entities, market operators and market participants should apply the better practices outlined in INFO 255.

These include, for activist short sellers, releasing short reports outside normal trading hours; drawing on reliable information and avoiding overly emotive language. Target entities should seek a temporary trading halt to provide time to digest and comprehensively respond to the claims of activist short sellers.

ASIC also reminds market participants of their obligations to report suspicious short selling activity under the market integrity rules, and for market operators to maintain a fair, orderly and transparent market.

Today, Fazzaco also reported ASIC announced that it has banned John Carlton Martin​, a director and former responsible manager of Union Standard International Group Pty Ltd (Union Standard), rebranding to United Strategic International Group, from providing financial services for 10 years.