Misinformation not on

IT has come to Business News attention that some company executives are prepared to mislead the press if and when it suits them.

We don’t like to get into naming names, but while a blue chip WA figure was caught out at this during the past fortnight, it is the lower end of the scale where we have our gravest concerns.

Business News was itself caught by one market junior, Games R Us whose chief executive Matthew Edwards told us the company’s financial position was sound.

A week later it was in administration – just six months after its listing.

An apologetic Mr Edwards told us this week that the situation had changed rapidly, and the company had made the hard decision to call in external parties before it started insolvent trading.

We’ll have to give Mr Edwards the benefit of the doubt at this stage, but we reckon he should take a leaf out of his chairman’s book. At least David Taylor refused to comment.

But with a bunch of technology stocks and other new entrants to the market going through a new phase of close market and regulatory examination, it may be possible corporate novices will make the mistake of lying in the hope that their misdemeanors are overlooked.

Bearing this in mind, Business News took the opportunity to review its copy of the Corporations Law.

We found a few interesting snippets.

For instance, section 999 is a fairly straight piece of law. It covers false or misleading statements in relation to securities and says that a person should not disseminate materially false or materially misleading information which is likely “to have the effect of increasing, reducing, maintaining or stabilising the market price of securities.”

Then there is section 184 (3) Use of Information. Under this part of the legislation, a person who obtains information as a director or officer commits an offence if they use the information dishonestly with the intention of directly or indirectly gaining advantage for themselves or someone else or causing detriment to the corporation.

Now I am not a lawyer, but I reckon anyone who misleads the press in a bid to suppress information that might affect the market is not much different from them giving one of their mates a nudge and a wink when times were better.

In fact, it could be worse. Rather than telling one person, misleading the press multiplies the effect of a lie.

Everyone knows that the media is an efficient way to disseminate information, just ask the armies of public relations professionals who are paid handsomely to get their message out.

Perhaps it is a matter for the

regulators to keep an eye on.