Hochtief Admits to Insider Trading Weeks Before Leighton Bidby
Hochtief knew Leighton's 2013 results when buying stock: ASIC
German builder says its `contravention was inadvertent'
Hochtief AG admitted to insider trading of Leighton Holdings Ltd. shares in early 2014, about five weeks before mounting a A$1.16 billion ($825 million) bid for the rest of the Australian construction company.
The German company knew about Leighton’s expected financial results for 2013 when it extended a window for its Australian unit to buy up more Leighton shares, according to documents filed Tuesday with the Federal Court of Australia by the Australian Securities and Investments Commission.
“Hochtief will submit to the Court that its contravention was inadvertent,” the Essen-based company said in an e-mailed statement. “By its contravening conduct, Hochtief did not seek or obtain trading profit.”
ASIC, as Australia’s markets regulator is known, is seeking costs of A$50,000 and a “pecuniary penalty” against Hochtief for the breach, the filings show. Hochtief and ASIC dispute the profit generated by the breach.
Hochtief is controlled by Spain’s Actividades de Construccion & Servicios SA. Leighton has since changed its name to CIMIC Group Ltd.
Hochtief became aware of Leighton’s expected earnings for 2013 at a Jan. 14, 2014, meeting of Leighton’s audit committee, ASIC’s court filings show. The results were going to be at the high end of previous earnings guidance, ASIC said.
At the time, Hochtief was Leighton’s majority shareholder and had a plan to increase its stake, the filings show.
Then, between Jan. 20 and Jan. 24, 2014, Hochtief Australia bought 1.14 million Leighton shares on behalf of its German parent, the court documents show. It bought a further 1.28 million Leighton shares between Jan. 29 and Feb. 3 that year, the documents show.
The following month, Hochtief offered as much as A$1.16 billion in cash to increase its stake in Leighton to a maximum of 74 percent from 59 percent.
A hearing date hasn’t been determined, according to the filings.