Syrah takes short-selling woes to regulators
- May 23 2017 at 11:00 PM
- Updated 21 mins ago
Syrah Resources chief executive Shaun Verner says he has contacted regulators about short-sellers in a bid to clarify whether there were any accuracy or truth requirements on third parties that have commented on his company in the public arena.
The graphite aspirant is the third most shorted stock on the ASX and Mr Verner told shareholders in recent days that he had raised the issue of short-selling with "relevant authorities".
Mr Verner told
The Australian Financial Review that the exercise confirmed his suspicion that there were almost no limits on what third parties could say about listed companies like Syrah.
"What we had been seeking to do was understand very clearly what information somebody can put into the market and what controls there are around that information, the truthfulness and veracity of it," he said.
"Publicly listed companies are extremely careful to ensure they release information that is accurate and timely and as fulsome as possible, whereas people commenting on the company have no restrictions on what they can say, particularly if the sources of that information are outside of Australia.
Anonymous analysts
"There's frustration around the fact there is, quite rightly, a very fulsome set of restrictions on one party, but no restrictions whatsoever on the other."
Mr Verner did not say which commentators he was concerned about, but Syrah was targeted by anonymous "research analysts" in December, when a group calling itself Viceroy Research published a negative note that implied the stock was worth 70¢ rather than the $2.95 per share it was fetching at the time.
More than 11 per cent of Syrah shares were sold short when Viceroy published its note, and short positions in the company have been above 17 per cent in recent weeks.
Viceroy has since
published a note on heavily shorted sandalwood company Quintis, and the approach has similarities to
the work of anonymous analyst "Iceberg Research", which raised concerns about accounting tactics used by commodity trader Noble Group in 2015.
Noble shares have fallen 95 per cent since Iceberg published its first note likening Noble to failed US company Enron. Noble was in a trading halt on Tuesday after Standard & Poors said the company could default on its debt within a year.
Graphite project
Mr Verner's move comes after
retailer Gerry Harvey lambasted short sellers as "criminals" earlier this year.
"Short selling is not possible in many other jurisdictions, it is not as if it is something that is supported right across all other open markets, so if we are going to allow it, we as a country or as a market do need to understand what structures we are prepared to accept around it," said Mr Verner.
The Syrah boss stressed he was not campaigning against short selling, and said the best way his company could respond would be to achieve its goals, including its aim to begin producing from its Balama graphite project in Mozambique this year.
"The responses we received suggested unless we can prove beyond doubt that somebody has made a totally false statement with intent to damage the company, and prove who that person was, then there is very little we can do," he said.
"Whilst that is extremely disappointing, it is what it is, and the best way for us to neutralise those positions is to deliver against our objectives."
Mining companies dominate the list of short-sold stocks on the ASX, with lithium producer Orocobre the most shorted and nickel miner Western Areas the second most shorted stock, ahead of Syrah in third place.
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