After almost six months of investigations, Australia's corporate regulator ASIC has finally claimed a scalp - that of a 32 year old stockbroker, Richard Macphillamy, who emailed clients at the height of the market panic just 2 days after the collapse of Lehman's to warn of a run on Macquarie Bank's cash management trust (CMT).
The ban comes 12 months after ASIC announced Project Mint, designed to stamp out illegal market manipulation, and while they are themselves rumoured to be working on additional cases, there are some interesting aspects to the case.
ASIC stated that "in Macphillamy's favour is the fact that there is no evidence that he had any dishonest purpose or manipulative behaviour." At the time, Lehmans had collapsed two days before, UBS had issued a downgrade on Macquarie a few weeks before, and JP Morgan issued a report the day after stating that Macquarie's model was "irretrievably broken."
No doubt the question will be asked in many brokers' offices what their job is, if not to inform clients about market "information"? We suspect there will be a very fine line between information and rumour, and as John Durie of the Australian noted in today's edition "if the guy was just passing on the market gossip of the day, his penalty is too harsh - in fact you wonder why he was even hauled over the coals."
ASIC needs to find a party that has actually done what they are looking for - maliciously spreading rumours known to be false with the intent of profiting from the resultant price move. And make sure it is enforced in both bull AND bear markets.
