Nice timing Greg.The government just started a crack down on...

Nice timing Greg.

The government just started a crack down on rumours like this.

Maybe get the post removed by mods.


Peter Martin
November 20, 2008

"RUMOURTRAGE", or the spreading of false information, would become illegal under a suite of measures put forward by Corporate Law Minister Nick Sherry to improve the workings of markets.

Speaking to the National Press Club, Senator Sherry said although some forms of rumourtrage were already outlawed under the Corporations Act, the Government needed to do more.

"After the collapse of Lehman Brothers in September, the level of irresponsible stories and rumours that were floating around in the Australian market significantly increased," he said.

"At least some of it was deliberate targeting of sound businesses.

"When you have a position where sound businesses are targeted, and I would accept it was by a small number of hedge funds — a very small number — irresponsibly, you have to act in the national interest."

Conceding that the spreading of a false rumour was difficult to prove, Senator Sherry said that in normal market circumstances the practice caused little harm.

"Normally people simply shrug their shoulders and laugh, and think 'that's nonsense', but some of the stories spread after the Lehman's collapse are personally distressing, some simply shocking and clearly aimed to cause great stress, anxiety and even distress not just to the shares but also to the staff of the companies being targeted."

Declining to name the businesses he said had been unfairly attacked by hedge funds, he said that for some it had been a "fair call".

"But when it reaches the point of sound businesses and it is not a fair call, I think government has a responsibility to act," Senator Sherry (right) told the Press Club.

He has referred the practice of rumourtrage, as well as closed analysts' briefings, margin borrowing by company directors, and so-called "blackout trading", to the Government's Corporations and Markets Advisory Committee for advice.

He said although blackout trading by directors and senior staff in the lead-up to corporate results was outlawed by many companies, the rules were openly flouted.

"This is unacceptable and makes a mockery of the rules," he said. "Active trading by directors between the close of books and the release of results has the potential to affect confidence in the integrity of Australia's markets."

The blanket ban on short-selling was lifted yesterday. Senator Sherry said the ban on short-selling financial stocks would remain, at least until January 27.

He called on the Opposition to support the bill before Parliament that would ban permanently "naked", or uncovered, short-selling.

http://business.theage.com.au/business/crackdown-on-rumourtrage-20081119-6bmg.html