Day traders warned to watch for hoaxes

The corporate regulator is investigating a fake media release that wiped hundreds of millions of dollars off the share price of Whitehaven Coal.

Environmental activists have claimed responsibility for the news release which said that ANZ bank had withdrawn finance for a coal project in New South Wales.

It is the third hoax carried out against a company listed on the stock exchange in the last six months.

Yesterday's press release looked legitimate enough - on an ANZ letterhead, the headline said 'ANZ divests from Maules Creek Project.' It went onto to say that the bank was pulling a $1.2 billion loan from Whitehaven Coal for its new mine in New South Wales.

Whitehaven Coal shares slumped by up to 9 per cent after a news story was published.

By early afternoon, ANZ issued a real press release saying the earlier release was fake.

Then environmental activist, Jonathan Moylan, claimed responsibility.

The corporate regulator, the Australian Securities and Investments Commission, is looking at whether there was a breach of the Corporations Act in relation to false and misleading statements.

It is the third time in six months that false statements have moved company share prices on the Australian Securities Exchange.

Retailer David Jones was the victim of a hoax takeover bid back in July.

Veteran share market analyst, Michael McCarthy, from CMC Markets says investors need to do more to verify information.

"It's a very concerning development that speaks to the integrity of the share market.

A lot of damage was done to investors and it's actually to day traders [retail investors who buy and sell shares frequently]," he said.

"In fact, yesterday afternoon, I spoke to a number of furious traders who'd suffered substantial losses because of the move." Verify before trading Mr McCarthy says the incident shows the importance of verifying information before trading based on it.

"Find other sources - every major corporate in Australia has a website these days.

If you follow that independently rather than clicking on links in a release, you can verify that way," he recommended.

"Of course, another good source of verified information is the ASX website itself.

Companies that make announcements like these are required to submit them to the exchange and the exchange publishes them for free on its website." Mr McCarthy says tougher laws probably would not prevent these kinds of incidents, and investor caution is the best protection.

"There are laws in place to deal with exactly this sort of situation," he added.

Security consultant Stephen Wilson runs the LockStep Group and says investors need to be wary of the opportunities modern communications technology presents to hoaxers and scammers.

"There's several tricks that hackers can use that lay people or the general public are not yet aware of - PDF documents that look legitimate can certainly be counterfeited, and the other trick is to fake a sender's email address, this is actually quite simple for a sophisticated hacker to do," he explained.

"In this case it looks as though somebody has misrepresented the origin as being the bank and the receiver of the email has probably just cursorily checked, the sender looked like anz.com.au and went from there."

Market Data

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    0.9328-0.0005-0.05%
    AUDUSD=X
    0.5551-0.0004-0.07%
    AUDGBP=X
    0.6750-0.0005-0.07%
    AUDEUR=X
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