A Hochtief construction site (Hochtief)

Companies

Hochtief admits “inadvertent” insider trading during Leighton takeover

2 February 2016 | By David Rogers | 1 Comment

Hochtief, Germany’s largest construction company, has issued a statement admitting insider trading during its battle to take control of Australian construction group Leighton Holdings in early 2014.

Hochtief has reached an agreement with financial regulator the Australian Securities and Investments Commission (ASIC) conceding liability, and has now entered a civil penalty proceeding to fix a fine.

Under Australian law, the maximum penalty is A$1m (US$707,000). However, Hochtief will ask for leniency on the grounds that its insider trading was accidental.

The statement said: “Hochtief will submit to the court that its contravention was inadvertent. By its contravening conduct, Hochtief did not seek or obtain trading profit.”

It added that the company had been “actively cooperating” with ASIC’s investigations since August 2014.

The contravention of Australia’s financial conduct rules took place when Hochtief, which is 66.5% owned by the Spain’s ACS Group, was buying shares as part of a takeover bid of Leighton.

Hochtief will submit to the court that its contravention was inadvertent. By its contravening conduct, Hochtief did not seek or obtain trading profit

According to a statement on the ASIC website, Hochtief contravened the insider trading provisions of the Corporations Act by extending the period in which it was buying Leighton shares by two weeks, from 31 January  to 14 February 2014, while being in possession of insider information that Leighton’s 2013 financial results were likely to be at the high end of previous earnings guidance.

During that period, Hochtief had two nominee directors sitting on Leighton’s board, Peter Sassenfeld and David Robinson.

Papers filed in the Federal Court of Australia by ASIC allege that Hochtief contravened insider trading laws because the two were aware of Leighton financial results on 14 January, and were present at the Hochtief board meeting at which it was agreed to extend the share purchase period.

Shortly after the share purchase, Hochtief gained control of Leighton. It has since been rebranded as Cimic Group.

Photograph: A Hochtief construction site (Hochtief)