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The defence team for Whitehaven Coal hoaxer Jonathan Moylan, facing a possible jail sentence for disseminating false information to the market in 2013, has used a sentencing hearing today to raise the case of Richard Macphillamy. Macphillamy was banned from providing financial services for 18 months after an investigation into rumourtrage (the spreading of false rumours to affect share prices) surrounding Macquarie Bank at the height of the financial crisis.

Moylan is in the NSW Supreme Court in Sydney today at his sentencing hearing. In January last year Moylan, then 24, mocked up an ANZ press release announcing that it had withdrawn a $1.2 billion loan to fund Whitehaven’s coal mine at Maules Creek, where he was camped in protest. Moylan paid $27 for the anzcorporate.com email address and sent the fake press release to 306 recipients, including 295 journalists at 98 different media organisations.

The fake announcement was reported as fact by AAP, and the news quickly wiped $300 million off the market capitalisation of Whitehaven, causing its shares to plunge 8.7% from $3.52 to $3.21 until a trading halt was called 23 minutes later. Actual investor losses were much lower, no more than $450,000.

Moylan pleaded guilty in May to one count of disseminating false information to the market, after being charged last year under s1041E of the Corporations Act 2001, concerning false or misleading statements.

He could face up to 10 years’ jail or a fine of up to $750,000. He tendered a signed written apology in evidence this morning.

Counsel for the Crown noted all the previous cases under the false and misleading information provision of the corporations law involved a desire and intention to manipulate the market for personal or corporate profit motives.

“This case if different, it is a matter of mitigation in one sense … This is a case in which there is no profit motive.” Judge David Davies asked what discretion he might have to impose an intensive correction order on Moylan and was told this would require an assessment.

The Crown’s lawyer said a prison sentence should be imposed but given Moylan’s guilty plea accepted that a sentence of imprisonment without full time custody may be justified and “we do not press for him to actually serve any time in custody”.

To the Macphillamy matter, as raised in this morning’s hearing. On September 17, 2008, Macphillamy emailed 32 traders representing there was a run on Macquarie’s cash management trust that had adversely affected Macquarie’s ability to meet withdrawals, and that when news of this became known it could result in a halving of Macquarie’s share price overnight. This was untrue.

ASIC found that Macphillamy, then working at Linwar Securities, was rash, ill-judged and inappropriate, but no charges were laid.

More than 50 people gathered to support Moylan outside the NSW Supreme Court this morning and the court room, which had to be moved to accommodate the crowd, heard Moylan had character references from Bob Brown, John Kaye, and local farmer and Lock the Gate spokesman Phil Laird.

Moylan’s lawyers argued the media was partly to blame for the impact of the hoax, saying any business journalist worth their salt would have checked the ASX for such a market-sensitive announcement, and pointing to a Media Watch episode that found the appropriate safeguards had not been followed.

The Crown barrister this morning stressed the importance of market integrity and said Moylan was an anti-coal activist who knew the information was false, spent days preparing the fake ANZ announcement and, while he may have intended primarily to expose the ANZ, must have been at least generally aware of the potential impact on the share market and the Whitehaven share price.

The hearing continues, and Crikey will keep you posted.

Peter Fray

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