THE Australian Securities and Investments Commission (ASIC) says it will appeal a Federal Court ruling that cleared iron ore miner Fortescue Metals Group (FMG) of deceptive and misleading conduct in disclosing growth plans.
The company's legal advisers are now preparing a vigorous defence during the appeal process.
ASIC had accused Fortescue and the company's chief executive, Andrew Forrest, of overstating so-called binding agreements with Chinese investors in announcements to the markets in 2004 and 2005.
ASIC said the case raised questions about the disclosure obligations of listed entities, and operation of Corporations Act and the role of directors' duties.
The proceedings arose out of Australian Securities Exchange announcements and other statements made by FMG in respect of framework agreements signed with Chinese companies relating to the development of a mine, railway and port for the mining and export of iron ore from the Pilbara region of Western Australia.
It is part of ASIC’s regulatory role to ensure that the laws which impose obligations on listed companies and their executives to keep the market properly informed, are properly enforced, including by the exercise of its appeal rights.
In a statement released after the judgement, Fortescue chairman Herb Elliott said the company and Forrest were disappointed with ASIC's decision to appeal.
"While we recognise ASIC has a legal right to appeal, the judgement was unequivocal in our favour," Elliott said.
"it is disappointing that after nearly three years if legal proceedings, which concluded in a strongly worded judgement in favour of the defendants, ASIC has still elected to pursue the company and [Forrest]."
ASIC said it believes the findings of Justice Gilmour raise important issues as to the proper interpretation and application of provisions of the Corporations Act that govern company announcements such as the misleading and deceptive conduct provisions, the continuous disclosure provisions, and directors’ duties under s.180. These issues warrant review by an appeal court.
ASIC’s notice of appeal filed with the court sets out the detail of its grounds of appeal.