The corporate watchdog has put Australian companies on notice about their obligations to quickly disclose both good and bad news to the stock exchange.
The warning comes after the construction company Leighton Holdings was fined $300,000 for failing to promptly update investors about costly delays on Brisbane's Airport Link toll road, Victoria's desalination plant and the company's Middle East operations, Al Habtoor Leighton Group.
The delays caused a $900 million profit downgrade but the market was only given the bad news in April last year, three weeks after Leighton became aware of the losses.
The shock downgrade and an associated $757 million capital raising sent Leighton shares into a 12 percent free fall after a trading halt was lifted.
While making no admission of guilt, Leighton agreed to fines of $100,000 for each of the three disclosure breaches and will engage a consultant to overhaul the company's disclosure policies.
The chairman of the Australian Securities & Investments Commission Greg Medcraft told the AM program that the Leighton fines should remind all list companies about their obligations to keep investors fully informed.
Listen to my interview with Greg Medcraft here.
"What we have is an outcome that sends a very clear message to the directors of listed companies that they need to have a close look at what happened at Leightons and make sure that their own governance policies around continuous disclosure are adequate," Mr Medcraft said.
"A company has to immediately notify the exchange of any information that a reasonable person would expect to have a material effect on its price or value of it's securities. It's actually very clear."
Signalling a push for tougher penalties on disclosure breaches, Mr Medcraft said companies were required to disclose bad news material to a share price in the same way favourable developments would be reported.
"You can't just disclose the upside. You must also disclose the downside," Mr Medcraft told AM.
"We have the systems, we have the people and we have the power and where we identify unexplained price movements then the ASX or ourselves will satisfy ourselves as to those unexplained price movements."
Read the background to ASIC's action against Leighton Holdings here.
Leighton chairman Stephen Johns confirmed that as part of accepting the infringement notices the company would implement a formal review of its continuous disclosure policies and procedures.
Read Leighton's response, released to the ASX on Friday evening, here.
"We take our continuous disclosure obligations very seriously and have undertaken to ASIC to implement an independent review of our systems," he said in a statement.
"We recognise that continuous disclosure is extremely important for the efficient operation of the market and will use the review as part of our program to improve the systems that support our business."
Leighton has explained the delay in disclosure by saying it didn't have enough certainty on the scale of the downgrade until a review of its operations was formally concluded with a board meeting on the morning of April 11.
The delay prompted a class action against the company by shareholders who invested between November 2010 and April 2011.