re: time to go long dont think so Biotech firm Chemeq fined...

re: time to go long dont think so Biotech firm Chemeq fined $500,000
Email Print Normal font Large font July 25, 2006 - 3:50PM

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AdvertisementThe Federal Court has ordered biotech Chemeq Ltd to pay $500,000 in fines to the corporate regulator for two counts of failing to disclose market sensitive information.

The Australian Securities and Investment Commission (ASIC) said this was the highest amount a listed company had been fined for breaching the regulator's market disclosure requirements.

The West Australian company has admitted failing to comply with disclosure rules on two occasions.

Between February 2003 and April 2004, Chemeq failed to inform the Australian Stock Exchange about a $25 million blowout in the costs of constructing a manufacturing facility in Western Australia.

And on October 6 and 7, 2004, the company had announced the granting of a US patent but failed to disclose the relevant impact of the patent on the company's commercial position.

Federal Court Justice Robert French said during the first contravention Chemeq's directors and management were kept informed of the cost overruns, but it had not occurred to them that the matter required disclosure.

"This suggests that at the time the board of Chemeq had a serious lack of appreciation of its obligations," Justice French said.

In the second contravention, Chemeq made a market announcement that it had been granted a US patent extension for its veterinary products until 2020.

This pushed its share price up from $1.78 to more than $3 over the two-day period.

However, the company had failed to inform the ASX the patent would not have a material impact on its commercial position in the light of its broader patent portfolio and the difficulty in enforcing patent rights.

Chemeq had raised about $45 million by issuing about 40 million fully paid shares during the period of its first contravention.

Another 26 million shares were traded during the two-day non-disclosure period of the second breach.

Justice French ordered Chemeq pay ASIC a penalty of $150,000 for the first breach and $350,000 for the second.

ASIC was also awarded costs of $170,000.

"Compliance policies and procedures will not be effective unless there is, within the corporation, a degree of awareness and sensitivity to the need to consider regulatory obligations as a routine incident of corporate decision-making," Justice French said.

"This kind of general sensitivity to the issues underpins what is sometimes called a `culture of compliance'."

Chemeq owns the intellectual property associated with an alternative treatment to antibiotics for the prevention and control of intestinal bacterial diseases in intensively reared livestock.