Investors will be looking for Fortescue Metals Group shares to come out of a trading halt this morning with the company telling the market if it is going to appeal a Federal Court Full Bench decision that supported an appeal from the corporate regulator against a lower court decision that had rejected ASIC’s claims that the iron-ore producer misled the market in 2004.
The unanimous appeal ruling came as something of a surprise late Friday because the original single judge ruling in the Federal Court in late 2009 had emphatically rejected the ASIC case and awarded all costs to Fortescue and against the regulator.
The appeal decision to effectively reinstate and support ASIC’s case could lead to Fortescue founding CEO Andrew Forrest being fined and disqualified from acting as a director.
In a statement on Friday evening Fortescue said:
"Fortescue Metals Group advises that the Full Bench of the Federal Court has upheld an appeal lodged by ASIC against the judgment handed down by Judge Gilmour on 23 December 2009 in civil penalty proceedings brought by ASIC against Fortescue and Fortescue’s co-defendant and CEO, Mr Andrew Forrest.
"Fortescue Chairman Mr Herb Elliott said the Company and Mr Forrest were disappointed with the decision and will consider all available legal options after the Company and its legal advisers have fully reviewed the decision by the Full Bench."
That would seem to leave a decision on an appeal open in terms of timing.
Fortescue has 28 days in which to lodge an appeal, but that’s too long for the company’s shares to remain suspended and too long for them to trade without a clear decision on an appeal to the High Court.
Weekend reports suggested that the company will make a further statement today on the matter. Other reports this morning suggested that Fortescue will wait to see what sort of penalty the regulator will impose on the company and or Mr Forrest.
In the Federal Court decision, Chief Justice Patrick Keane ruled the original judge in the case, John Gilmour, erred in his original findings that cleared the Pilbara iron-ore miner.
"In my respectful opinion, ASIC’s allegations of misconduct on the part of FMG and Forrest were wrongly rejected by the trial judge."
Fortescue was ordered to pay all the legal costs of the ASIC which brought the original action against Fortescue, predicted to run into the tens of millions of dollars.
It would also have to cover further penalties, which Chief Justice Keane said would be handed down at a later date.
In its original case, ASIC contended that so-called "binding contracts" the company had with three state-owned Chinese firms to build its Pilbara iron ore project, which Fortescue announced in 2004 and 2005, were merely "framework agreements" which did not bind either party, and the announcements had the effect of ramping up the company’s share price.
The three-year case culminated in a five-week court proceeding in early 2009, with a further seven months before Justice Gilmour delivered his verdict in December of that year.
Friday’s ruling comes on the same day that Fortescue said it would pay its first ever dividend after reporting a strong jump in first half profit.
The company also committing itself to spending $8.4 billion to boost iron ore production to 155 million tonnes of a year.
Fortescue said its net profit rose to $314.1 million in the six months through to December from $43.2 million a year earlier, while revenue for the period more than doubled to $2.53 billion from $1.18 billion.
And the ANZ Banking Group Ltd has completed the market update from our big four banks by revealing a 27% rise in what it calls underlying profit.
And, as with the other banks, the ANZ can thank a sharp fall in bad debts and better credit conditions for the rise.
The group didn’t give a cash earnings figure, so an accurate comparison with the others is impossible.
Investors didn’t like the result, sending ANZ shares down 3%, or 74c, on the day to $24.89.
Underlying profit after tax for the three months to December 31 increased to $1.4 billion from the first quarter of 2010.
The bank said the key parts of the update were:
"Profit before provisions (PBP) grew 7% PCP to $2.3 billion – up 1% on the last quarter of FY2010 (QOQ).
"Adjusting for foreign exchange (FX) and acquisitions, PBP grew 6% PCP and 2.6% QOQ.
"Continued strength in the Australian Dollar meant that income, at $4.2 billion, increased over 2% FX adjusted QOQ with growth in all divisions except New Zealand. FX impacts produced a 2% negative impact on underlying profit after tax both PCP and QOQ.
"ANZ has continued to invest for growth, particularly in Institutional and in Asia. Revenue/expense jaws were neutral QOQ on an FX adjusted basis.
"Group margins (excluding Global Markets) showed a small increase across the quarter but the rate of growth has slowed. Higher average funding costs and intense
