Newcrest Mining fined by ASIC – what shareholders need to know

Preferential treatment of some shareholders over others is not new, but this time it’s being punished.

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Regular news readers and shareholders of Newcrest Mining Limited (ASX: NCM) will be aware that the company has been in court with ASIC nearly a year over allegations of giving market-sensitive information to some shareholders three days before notifying the market of the information.

The shares dropped roughly 15% before the announcement was released to the market at large three days later.

Newcrest admitted fault and settled yesterday with the regulator for a fine of $1.2 million dollars, the largest fine ever given for this kind of misconduct. Although a significant outcome, the fine is little more than pocket change and not likely to act as a significant deterrent.

Fortunately the share price recovered within days and went higher before trending down to its current levels; however Newcrest still has to contend with potential class action lawsuits from disgruntled shareholders. The lawsuit will be conducted by law firm Slater & Gordon Limited (ASX: SGH) and appears to be not unlike the lawsuit conducted against the now defunct Forge Group which is led by Bentham IMF Ltd (ASX: IMF).

It’s unfortunate that we live in a world where shareholder interests are protected more by litigation firms rather than the corporate watchdog ASIC, or the ethical obligations of large companies.

Shareholders must be quite careful with who they decide to trust as ultimately, most of the entities you deal with are guided by financial self-interest. Here at The Motley Fool, however, we place your interests on par with our own – not least because we have our own money invested in our recommendations. The Economist even wrote that:

“The Motley Fool stands out as an ethical oasis in an area that is fast becoming a home to charlatans.”

TMF regularly contacts companies to protect the views of retail shareholders, who so often have no one to voice their complaints at unfair treatment by corporations.

Companies with open, honest management teams whose interests align with shareholders get a big tick in our books, and our latest recommendation is one such organisation.

Besides a responsible management team, this small company also boasts record profits and a fast growing, fully-franked dividend. You can receive this report for FREE by signing up to our free newsletter Take Stock – it takes only 30 seconds and is packed full of useful market insights. Sign up for it here.

Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.

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