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Ronan Keating croons, “You say it best, when you say nothing at all.”
But when it comes to listed companies, I prefer the band Last Days’ take: “Your Silence Is The Loudest Sound.”
As reported in yesterday’s National Business Review print edition, the New Zealand Shareholders’ Association has complained to NZX about an “unusual” share price jump in the lead-up to a major announcement by loss-making listed company Rakon on July 5.
Between July 3 and July 5’s trading halt – preceding the announcement of a Chinese joint venture’s factory sale – the price spiked from 20c to 25c, or 25%.
There were also two trades totalling 433,106 shares at 10.15am on Friday, a little over an hour before the announcement.
“It’s unusual to see a rise just a few hours before something like this – there were a large number of shares traded compared with the previous couple of weeks,” chairman John Hawkins says.
The NZX, for its part, is not speaking.
It doesn’t comment on individual cases – a necessary evil considering it must get many complaints and tip-offs but, in fairness, should only make public those that emit a strong scent of the unusual.
It’s worth noting Rakon was subject of a price inquiry by NZX last year.
Market supervision’s Fraser Wyeth wrote to Rakon asking about a “large increase” in price between January 4 and January 27 – from 47c to 67c, or a spike of 42.5%.
Rakon’s answer from chief operating officer Graham Leaming was, in full: “In response to your letter dated 30 January 2012, we confirm Rakon Limited (RAK) continues to comply with Listing Rule 10.1.1."
NZX provided background to NBR ONLINE this week about its surveillance team, which undertakes in-depth analysis of anomalous market conduct “which may include analysis of activity by security, by participant or by client”.
“NZX will from time to time make price enquiries of issuers if trading prices or volumes are not adequately explicable by reference to information considered generally available to the market.
“This is not a strictly formal approach and NZX will take into account changes in price and volume in the context of the liquidity of the stock.
“Where NZX does make a price enquiry, this will be released to the market.”
Trust us, in other words, we’re doing our job. But not everyone does.
Keeping up appearances
One NBR ONLINE reader commented yesterday a 25% increase in share price over a short period should have prompted the NZX to take action – or issue a price inquiry at the least.
“Instead, it's the usual 'all care and no responsibility' stance by NZX. So much for the new regime.”
Perhaps NZX thinks issuing a price inquiry will garner the same, one sentence response.
But to some, like the previously-mentioned NBR reader, issuing a price inquiry gives the appearance, at least, that something is being done.
Which brings us back to the company itself.
Despite a phone conversation earlier this week and a follow-up email and phone call, Rakon refused to answer NBR’s questions.
Late yesterday afternoon, the company issued an announcement to the NZX, stating: "Rakon can confirm no company directors or staff, or their related parties, who are required to comply with the company’s Securities Trading Policy, have sought or been granted approval to buy or sell shares before the announcement."
Why didn't Rakon simply say that in the first place, instead of issuing a sniffy "media speculation" announcement about what was a factual report based on the concerns of a credible organisation?
Let’s remember, the company is still one-third owned by the Robinson family, who have three seats on the board, including chief executive Brent.
There is not just a perception issue here, there’s also the company’s responsibility to shareholders.
As outlined in yesterday’s NBR print edition, the company’s share price has fallen from $5.67 in May 2007 to the roughly 20c mark it occupies today.
Rakon’s long-suffering shareholders have had enough pain in share price movement alone, without having to worry about this rather public criticism.