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Uncharted legal waters as coal hoaxer mulls jail, fines

Anti-coal protester Jonathan Moylan’s fake press release fooled the market this week — but will the stunt land him in jail? Sally Whyte examines the precedents and finds Moylan is in uncertain waters.

Environmentalist Jonathan Moylan wanted to put pressure on ANZ and coal backers through his fake press release on Monday. But the focus may end up being on the corporate watchdog.

Speaking to Crikey, Moylan says it took a “couple of days” after the press release temporarily wiped $314 million off Whitehaven Coal shares for the Australian Securities and Investment Commission to find him at his camp in the Leard State Forest near Maules Creek in New South Wales. His computer and mobile phone were confiscated but charges have yet to be laid.

Whitehaven Coal, ANZ and investors could all take civil action, according to Associate Professor John Duns of Monash University’s Law Faculty, but with the 24-year-old activist unlikely to have the resources to pay up, eyes will turn once again to the regulator.

Moylan says he’s now “well aware” of the possibility of 10 years in jail and fines of up to $495,000, but he didn’t know about the possible consequences when he sent the fake release saying ANZ had pulled $1.2 billion of investment from Whitehaven Coal’s mine at Maules Creek. Asked if he would still have acted, Moylan avoided the question.

I’m not someone with hundreds of thousands of dollars,” Moylan said about the prospect of fines and damages. He has been in talks with lawyers but doesn’t have representation yet.

We’ll see what happens if it comes. I’ve said all along that I’ve been prepared to accept the consequences. I just have to deal with it as it comes up.”

Whitehaven Coal’s biggest shareholder Nathan Tinkler has not commented on whether he plans to take action against the activist.

According to Duns, Moylan could declare bankruptcy to avoid paying damages: “You’d think there’s not going to be much satisfaction in suing him personally.” However, while declaring bankruptcy protects a person from having to pay out if sued, it does not protect them from fines that come as part of a sentence.

Duns believes the combination of media attention, the unlikelihood of results in a civil action and the ASX’s resistance to unravelling Monday’s transactions mean ASIC will be under pressure to make an example out of Moylan and his fake press release.

ASIC is investigating Moylan under Section 1041E of the Corporations Act, which deals with making false or misleading statements. The act states a person must not make statements that “have the effect of increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market operated in this jurisdiction”.

According to Associate Professor Keturah Whitford at the Australian National University’s College of Business and Economics, Moylan could be charged under Section 1041E, but could also face civil action from stakeholders under Section 1041H of the Act.

There isn’t an Australian precedent to foreshadow the likelihood of conviction or possible sentences. Whitford says it’s “hard to predict sentencing, but the extent of damage including losses to investors would be taken into account and the fact that he wasn’t personally profiting”.

Moylan says he wrote the press release by himself, but declined to say if anyone else knew what he was doing.

This is the third time in seven months the Australian stock market has seen share prices and trading affected by hoaxes. In July last year, David Jones stocks fell 5.4% on the back of a fake takeover bid and in October, trading in MacMahon Holdings was halted due to a bogus takeover bid.

Market integrity is a fundamental case,” said Duns. “There’s been a couple of them and that increases the pressure on ASIC to take action.”

Charges haven’t been laid over the David Jones or MacMahon cases, so there is no Australian precedent. Comparisons can be made to American activist Tim DeChristopher  — he was sentenced to two years jail in 2011 after making false bids on an oil and gas lease sale in Utah.

Moylan says it’s unlikely he will take similar action again, but that others will try to “embarrass and shame” corporations with more hoaxes.

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  • 1
    Posted Friday, 11 January 2013 at 1:12 pm | Permalink

    Surely it is relevant that much of the damage was due to the media following its lazy habit of reporting press releases without doing even basic and simple checks.

  • 2
    Posted Friday, 11 January 2013 at 1:45 pm | Permalink

    Hear hear Gavin, I was going to make the same point. The AFR was sucked in, judging by a Google cache I saw.

  • 3
    Jimmy
    Posted Friday, 11 January 2013 at 1:52 pm | Permalink

    Yep the media was lazy but the results were exactly what was intended by Moylan so his guilt seems pretty clear.

  • 4
    Posted Friday, 11 January 2013 at 2:18 pm | Permalink

    Moylan’s guilt seems clear enough, but what penalty should he be given? He would have caused very little damage had the mainstream media not reported his media release as fact.

  • 5
    Myriam Robin
    Posted Friday, 11 January 2013 at 2:23 pm | Permalink

    The people most hurt by the stunt aren’t in a position to sue, it seems to me. Whitehaven wasn’t hurt much. Its stock plunged and then rebounded. If anyone was hurt, it’s small retail investors who sold only to see savvy investors like Morgan Stanley pick up their stock on the cheap for an almost instant profit.

  • 6
    Andybob
    Posted Friday, 11 January 2013 at 2:24 pm | Permalink

    Lack of personal profit will be a mitigating factor regarding penalty, assuming Mr Moylan is convicted of an offence, but there are still strong general deterrence factors regarding stock market manipulation.

    The Court will not want to send a message that market manipulation is ok provided you do it for a just cause that you strongly believe in. The penalty imposed will include some component intended to deter others from similar conduct.

    Ultimately this kind of hoax prank can be self defeating. It removes focus from the coal companies and their conduct and makes the hoaxer’s conduct the centre of attention. Whether that conduct has the effect of alienating the public or not is the question. Here the debate so quickly swung around to the effect on ‘mum and dad investors’ (assuming that loss suffered by any other type of investor was immaterial) that it would seem the public is reasonably tolerant of this sort of thing. Whether they are sufficiently engaged to pay attention to the arguments against the development is the next question, I haven’t seen much discussion of the merits of Mr. Moylan’s objections in the MSM at all.

  • 7
    Jimmy
    Posted Friday, 11 January 2013 at 2:25 pm | Permalink

    Gavin Moodie - ” He would have caused very little damage had the mainstream media not reported his media release as fact.”
    And Mark Chapman would of caused very little damage if the gun didn’t go off.
    The fact is Moylan loaded the weapon, aimed it and pulled the trigger, the fact that the weapon worked as intended doesn’t not mitigate his culpability.

  • 8
    Jimmy
    Posted Friday, 11 January 2013 at 2:28 pm | Permalink

    Andybob - “The Court will not want to send a message that market manipulation is ok provided you do it for a just cause that you strongly believe in.” Especially as think that if they did there would be a flurry of people attempting to manipulate the market for a cause AND working in concert with like minded individuals who would profit - if only to fund the cause.

  • 9
    Scott
    Posted Friday, 11 January 2013 at 2:30 pm | Permalink

    Who do you blame…the wind that fanned the flames? Or the goose who threw the lit cigarette in the grass?

    You can rage against the wind if you like….but it seems the authorities believe the goose is easier to pluck.

  • 10
    Posted Friday, 11 January 2013 at 2:34 pm | Permalink

    I suggest a better analogy is defamation. If I say ‘Brutus is a traitor’ to my best mate Les, Brutus may have an action against me but the damages would be modest. However, if my statement is published on the front page of the Australian Financial Review, Brutus’ damages would be much higher.

  • 11
    jesse mandrigorian
    Posted Friday, 11 January 2013 at 2:34 pm | Permalink

    but there are still strong general deterrence factors regarding stock market manipulation.”

    haha, if this were true half the global financial institutions would be behind bars.

  • 12
    Posted Friday, 11 January 2013 at 2:43 pm | Permalink

    I suggest a better analogy is defamation. If I make a defamatory statement about someone to a mate the defamed person may have an action against me but the damages would be modest. However, if my statement were published on the front page of the Australian Financial Review the defamed person’s damages would be much higher.

  • 13
    Malcolm Street
    Posted Friday, 11 January 2013 at 2:48 pm | Permalink

    “Market integrity is a fundamental case,” said Duns. “There’s been a couple of them and that increases the pressure on ASIC to take action.”

    Now *that’s* funny! Stock market with integrity, ASIC to take action!

  • 14
    Jimmy
    Posted Friday, 11 January 2013 at 2:53 pm | Permalink

    Gavin Moodie - “If I say ‘Brutus is a traitor’ to my best mate Les, Brutus may have an action against me but the damages would be modest” And what if you issued a press release stating that “brutus is a traitor”? And if you then fielded calls to confirm the press release was accurate?

    The boy is in a world of pain and his actions did nothing for the cause.

  • 15
    Posted Friday, 11 January 2013 at 3:02 pm | Permalink

    If I issued a press release I would have published my potentially defamatory statement about Brutus to, say, a couple of hundred people. If I confirmed and amplified that statement in calls from the media I may have repeated and perhaps exacerbated my defamation to 5 or 10 others. Damages would be higher than making my statement to my mate Les, but still modest compared to damages if my statement were published to some 100,000 readers.

  • 16
    Microseris
    Posted Friday, 11 January 2013 at 3:03 pm | Permalink

    It’s an absurd scenario where the enforcement of the law seeks to protect immoral speculation on the stock market but won’t protect the habitability of the planet.

    How many prosecutions for captains of industry who strategically release information to manipulate the markets to their benefit? As Katherine Murphy noted today in Fairfax, RMIT academics Cathy Greenfield and Peter Williams have found that finance journalism doesn’t simply report market trends, but participates in them, ”actively shaping public attention and categories of thought”.

    Due diligence by those reporting? Due diligence by the speculators?

    The new god is money. Amen.

  • 17
    Jimmy
    Posted Friday, 11 January 2013 at 3:09 pm | Permalink

    Gvin Moodie - You are totally ignoring “intent” you told “say, a couple of hundred people” with the express intention of them putting the story on the front page - therefore you may as well of put the story on the front page yourself.

    Microseris - I am still waiting for your morally approved investment list.

  • 18
    Bill Hilliger
    Posted Friday, 11 January 2013 at 3:10 pm | Permalink

    The MSM has clearly been shown up this time for not double checking the story of this financial magnitude; and last but not least of fanning the flame. There could be a case of the media aiding and abetting Moylans fake press release. The AFR has just demonstrated its integrity as a financial newspaper and that it cannot be taken seriously ever again on whatever they publish; and what they do print is best taken with a grain of salt. Meanwhile the next time something sensational is published let the reader be warned - do you own checking, don’t rely on journalists. Ha, ha, ha what a joke this is proving to be - the main joke is the tired and lazy MSM.

  • 19
    Bill Hilliger
    Posted Friday, 11 January 2013 at 3:15 pm | Permalink

    Its a case of Moylan plucked the mainstream media. They did his job for him.

  • 20
    SBH
    Posted Friday, 11 January 2013 at 3:16 pm | Permalink

    How does this stack up with companies making statements that can’t be true, like the saga followed in Crikey by Ben Sandilands of Boeing’s increasingly unrealistic ‘dreamliner’ deliver dates?

    And I don’t know about anybody else but when did ASIC, ostensibly an administrative regulator, get the power to sieze property. There are more any more government agencies that are given police powers and a number with quite extreme coercive powers which we wouldn’t give to police and that should be a concern for any citizen in a democracy.

  • 21
    Jimmy
    Posted Friday, 11 January 2013 at 3:23 pm | Permalink

    SBH - I would think given that ASIC would need to see trading records for it’s investigations into suspicous trading it would always have had that power.

    And the difference with the dreamliner is whether the are demonstrably false and whether the person making the statement bel ieves it is true at the time of making it.

  • 22
    Microseris
    Posted Friday, 11 January 2013 at 3:42 pm | Permalink

    Jimmy, whilst I’m sure there is plenty of ethical investments out there, I don’t own shares.

  • 23
    Boston the Dog
    Posted Friday, 11 January 2013 at 3:43 pm | Permalink

    I just like the imagery of those ASIC people “raiding” this bloke’s campsite near Boggabri!

    Wonder how they got there?

    Assault helicopter? Landcruiser? Cobb & Co coach? Horseback? Hiked?

    Shades of ‘Waltzing Matilda”?

    “Down came the Squatter a-riding his thoroughbred;
    Down came policemen - one, two, three.
    “Whose is the jumbuck you’ve got in your tuckerbag?
    You’ll come a-waltzing Matilda” with me.”

    Andrew Barton Paterson would be laughing.

  • 24
    Posted Friday, 11 January 2013 at 3:50 pm | Permalink

    If I issue a defamatory media statement to 200 people intending that it be republished to 2 million people but it doesn’t get republished then my defamatory statement was published to only 200 people and the damages would be modest. If I issue a defamatory media statement to 200 people intending that it be republished to 2 million people and it gets republished to 200,000 people then damages would be substantially higher than my statement being published to 200 but substantially lower than it being published to 2 million. In defamation and, I suggest in Moylan’s case, the size and nature of the actual audience is important.

  • 25
    Jimmy
    Posted Friday, 11 January 2013 at 3:53 pm | Permalink

    Microseris - So when you say in regards to your super you are “I am self funded. Ethically.” but you “don’t own shares.” I can only assume your entire super portfolio is in property as if you had money in the bank (like say the ANZ) then your money is being used to fund mines like whitehaven and who knows what else.

    I just hope all that property you own was built with ethical materials and that you don’t have any moral qualms about making it more difficult for first home buyers or profiting off people who can’t afford a house.

  • 26
    Jimmy
    Posted Friday, 11 January 2013 at 4:00 pm | Permalink

    Gavin - ” I suggest in Moylan’s case, the size and nature of the actual audience is important.” There was about 6m more shares traded on the day of the press release than either the preceeding or following day and more than $300m was temporarily removed from the companies value- I would say the extent of his impact was large

  • 27
    dazza
    Posted Friday, 11 January 2013 at 4:06 pm | Permalink

    Is it true that the media actually rang ANZ to confirm the statement and when ANZ told this newspaper to forget it because it’s a hoax, the newspaper went ahead and printed it anyway?

  • 28
    Posted Friday, 11 January 2013 at 4:11 pm | Permalink

    Of course Moylan reached a big audience, but only because his media release was republished by the mainstream media. I suggest the mainstream media’s republication of Moylan’s statement was crucial to the extent of damage suffered.

  • 29
    Jimmy
    Posted Friday, 11 January 2013 at 4:17 pm | Permalink

    Gavin - “Of course Moylan reached a big audience, but only because his media release was republished by the mainstream media.” Which was his exact intention - it wasn’t like he couldn’t foresee the papers would publish, he went to great lengths to ensure that they did.
    ” I suggest the mainstream media’s republication of Moylan’s statement was crucial to the extent of damage suffered.” Yes it was, just like a gun is crucial to the amount of damage the bullet does but do you hold the gun or the person who pulled the trigger responsible.

    If Moylan had of chosen not to use the gun (ie the media) but instead thrown his bullet at the victim (say by using a bull horn outside the ASX) then yes his damage wold be limited if someone else reused the bullet but in this case he planned his actions, the consequences were exactly as predcted so trying to blame the instrument is not going to work.

    Dazza - I would say No. The story I heard was they rang the number provided of the press release and spoke to Moylan pretending to be a ANZ employee who confirmed it.

  • 30
    Posted Friday, 11 January 2013 at 4:21 pm | Permalink

    But the media is not a tool or a machine. It is an actor with agency and, I would prefer, responsibility.

  • 31
    Jimmy
    Posted Friday, 11 January 2013 at 4:32 pm | Permalink

    Gavin - “But the media is not a tool” Come on, if the media isn’t a tool why do people employ PR officers? Why does Murdoch keep his papers?

    Even if you treat the media like a human that doesn’t mean that Moylan didn’t exploit it, and when a “mastermind” exploits the weaknesses in an underling it is the mastermind who feels the full weight of the punishment, not the underling.

    Again this man came up with a plan, the plan worked perfectly so you can’t now push the responsibility for the consequences of that plan on the unwitting pawn, even if they should of known better.

  • 32
    Mike Flanagan
    Posted Friday, 11 January 2013 at 4:33 pm | Permalink

    Boston theDog;
    How very true!
    How about the mens rea principle
    Moylan’s intent was to highlight the culpabilit5y of the Coal Industry in their destruction of the common not to manipulate markets.
    It is the incompetent press membersw who saw a unsubstantiated press release as a market impact and an opportunity to sell more advertising through increased circulation.

  • 33
    Jimmy
    Posted Friday, 11 January 2013 at 4:40 pm | Permalink

    Mike Flanagan - “Moylan’s intent was to highlight the culpabilit5y of the Coal Industry in their destruction of the common not to manipulate markets.” What a lot of old cobblers!! If he wanted to “highlight the culpability of the Coal Industry” there were plenty of other ways to do it without involving the market.
    His actions drew precious little attention to “culpability of the Coal Industry” as all the talk has been on the market impact.
    He knew what he was doing, he knew the impacts and to his credt he is apparently willing to take a lot more responsibility than any of his “supporters” on this website are willing too.

    Whatever happened to “Don’t shoot the messenger”?

  • 34
    Posted Friday, 11 January 2013 at 4:46 pm | Permalink

    But the media are not an unwitting pawn: they are a competent actor in the episode.

  • 35
    fractious
    Posted Friday, 11 January 2013 at 4:56 pm | Permalink

    Jimmy - preaching morals and ethics under an article about the stock market? You’re a riot mate.

    Microseris “How many prosecutions for captains of industry who strategically release information to manipulate the markets to their benefit?”

    Precisely.

    From what I can se very little “damage” has been done, except to the reputation of the MSM and the “integrity” (bahaha) of the ASX. If Moylan is to be subject to criminal charges and civil suits as some form of ohbject lesson to others, shouldn’t those asleep at the wheel of the MSM organisations that publicised it further also get their arses kicked? Come to that, if what Moylan did was so wrong, shouldn’t those traders (like Morgan Stanley as Myriam Robin mentions) who made a handy million or fifty out of buying cheap stock and selling it high be made to give their grubby profits back? Or do “morals” and “ethics” not apply to those parties that profit off the back of an unlawful act?

  • 36
    Jimmy
    Posted Friday, 11 January 2013 at 4:56 pm | Permalink

    Gavin - I agree that the media should have checked the facts better but everybody knows that journalistic standards in this country (and elsewhere) are terrible and Moylan explioted that.

    If I successfully rob a bank because I knew the security guard was under trained and lazy should I get a lower penalty because I successfully exploited that and had he been a better security guard I would not have been able to execute my plan?

    So yes the security guard should be hauled ove the coals but it doesn’t lessen Moylans responsibility or culpability.

  • 37
    Jimmy
    Posted Friday, 11 January 2013 at 4:59 pm | Permalink

    Fractious - I am not preaching morals and ethics - Microseris asserted on another thread the small investors were fair game because they invested unethically - I just want Microseris to advise how they could of avoided such a fate and still pan for their retirement.

  • 38
    Posted Friday, 11 January 2013 at 5:05 pm | Permalink

    I don’t think the analogy is very close, but yes, you should get a lower penalty for attempted robbery than for an executed robbery. And I suggest that in most circumstances most defendants would get a lower penalty for just attempting than for attempting and executing a crime.

  • 39
    zut alors
    Posted Friday, 11 January 2013 at 5:08 pm | Permalink

    Gavin Moodie’s 1.12pm post was spot on. This is the new age of journalism ie: reporting badly-written press releases without questioning the content.

    The journos are too busy writing opinion pieces these days, reporting the news is sooo 20th century. After all, fact-checking requires a little time and some research. And we’re all too busy for that in the 21st century…apparently.

    What a cheek to have the share price manipulated from the other side of the fence - doesn’t Moylan realise only those with vested financial interest get to play that game without charges being laid.

  • 40
    مكينSultanofAustralisTerraNullius
    Posted Friday, 11 January 2013 at 5:25 pm | Permalink

    he seems like a sweet boy. let him go and punish christine milne for being such a vindictive person against the investors. somebody has to pay for the crime. you can’t say it’s people’s fault for not investigating it thoroughly, if that is the case there is no need to prosecute hoax and frauds, if we fell for a Nigerian scam or any other that is our fault for not investigating.

  • 41
    dazza
    Posted Friday, 11 January 2013 at 5:30 pm | Permalink

    ”..How many prosecutions for captains of industry who strategically release information to manipulate the markets to their benefit?”

    http://www.youtube.com/watch?v=o1jUFNyZvHQ&feature=youtube_gdata_player

  • 42
    Brefney Ruhl
    Posted Friday, 11 January 2013 at 5:48 pm | Permalink

    Just goes to show. Stand in front of a bulldozer or even break a window in protest, you’ll get a fine and a good behaviour bond. Stand between a corporation and its bottom line and the government will throw the book at you.

  • 43
    Hugh (Charlie) McColl
    Posted Friday, 11 January 2013 at 6:41 pm | Permalink

    Jimmy, I suggest that ASIC throw exactly the same charge at the individual media ‘publishers’ as they throw at Moylan. Let’s hear the actual excuse of the MSM instead of assuming their innocence. There’s absolutely no satisfaction in fining or imprisoning someone like Moylan when the system appears to be set up to allow exactly the same thing to happen again. It can’t happen if the MSM has some protocols which they are legally obliged to follow.

  • 44
    GeeWizz
    Posted Friday, 11 January 2013 at 7:05 pm | Permalink

    Cut off Moylans Dole for the rest of his life.

    That will stuff him…. the lazy dole bludger will actually have to go out and find a job rather than bludging off taxpayers and those evil coal mines.

    Perhaps we can get him working a job sweeping the chimneys at the local coal power plants that give him the lifestyle he takes for granted?

  • 45
    AR
    Posted Friday, 11 January 2013 at 7:35 pm | Permalink

    a person must not make statements that “have the effect of increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market operated in this jurisdiction”.” so all those foaming lunatics in shiny coats on the sacred floor and the well lubricated, post prandial hacks scribbling for the Fin & Oz biz scraps pf dead trees aren’t doing just this?
    Not infrequently with less probity.

  • 46
    Patriot
    Posted Friday, 11 January 2013 at 7:53 pm | Permalink

    Nothing uncertain about this at all. He is an eco-terrоrist who knowingly committed an act of economic sabotage. He should be thrown in gaol and left to rot.

  • 47
    Hugh (Charlie) McColl
    Posted Friday, 11 January 2013 at 8:03 pm | Permalink

    I beg your pardon. I realise that in a previous post I suggested that the MSM might be legally obliged to follow some probity protocols before ‘publishing’ any financial information (however you want to define that) into the public space.
    Of course, how unreasonable would that be? That newspaper publishers like, say, News Ltd, Fairfax or Crikey, are held legally responsible for the integrity of the (financial) material they choose to publish. Oh dear. That would be terribly inconvenient wouldn’t it? Shit yeah!

  • 48
    Steve777
    Posted Friday, 11 January 2013 at 8:46 pm | Permalink

    It seems to me that all that a media outlet in possession of the hoax email had to do was contact one of the named officials at the bottom of the document. Had they done so,there would have been no damage. And why is this sort of thing so damaging? Because market players act like a herd of some brainless prey animal on the veldt spooked by a lion. Because it is dominated by gamblers, not investors.

  • 49
    Tim nash
    Posted Friday, 11 January 2013 at 9:26 pm | Permalink

    GeeWizz

    Cut off Moylans Dole for the rest of his life.”

    Moylan is a friend of mine and as far as I know he never has been on the dole. He was very serious about this and now I can see why, because of comments like yours.

  • 50
    Mike Flanagan
    Posted Friday, 11 January 2013 at 9:57 pm | Permalink

    Jimmy;
    I could suggest your scales of justice seem to lack some balance.
    If we are to make Moylan a convict and dispatch him in leg irons to the colonies then there are a few more that should accompany him in the leg irons on bread and water.
    The dishonest paid advertising campaign by the mining industry against the MRRT puts a number of moguls and corporate bodies in the frame. That also had an effect on the casino euphamistically referred to as the ‘market’. ASIC will be busy.
    Furthermore the behaviour of the Coal Industry Association over the Carbon Tax is a fine example of fraud by those with money that may have had an impact on the same ‘market’
    And of course ASIC could consider the actions of our ‘illustrious’ finance sector in their lead up to the GFC.
    The principle of ‘criminal intent’ is certainly ‘old’ but ‘cobblers’ is dependant on the eye of purveyor but needless to say any law should be applied with balance to all.

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