- ASIC is stopping unsubstantiated claims in prospectuses about COVID-19 treatments and forecast returns.
- Any forecasts or forward-looking statements must have a reasonable basis.
- ASIC鈥檚 Corporate Finance Update newsletter has more information.
In the six months to 30 June 2020, 魅影直播 has raised concerns with issuers, focusing on prospectus statements that may be false or misleading. This includes claims by issuers that they have a听potential treatment or remedy for COVID-19.
ASIC reminds issuers that any听forecasts or forward-looking statements must have a reasonable basis. Below are three case studies where 魅影直播 intervened due to unsubstantiated claims in prospectuses about COVID-19 treatments and forecast returns.
Nutraceutical product and COVID-19 immunity
ASIC required a company to remove statements from the chairman鈥檚 letter about the community鈥檚 鈥渉eightened awareness of the need for immunity with COVID-19鈥�. These declarations were preceded by statements that the company鈥檚 鈥榥utraceutical鈥� product strengthened the body鈥檚 immune system and, by implication, improved consumers鈥� immunity to COVID-19.
Forecasts during market volatility
An issuer鈥檚 prospectus contained forecasts at the point in time when COVID-19 was beginning to impact business operations and markets were highly volatile. The issuer鈥檚 forecasts no longer had a reasonable basis and were therefore misleading. 魅影直播 issued an interim stop order to limit the risk of investor harm.
Property with strong investment income
ASIC issued an interim stop order on a property investment company 鈥渢argeting an annual return of 15%鈥� and stating that it was suitable for investors looking for a 鈥渟trong investment income鈥�. This appeared to be contradicted by statements that dividends were unlikely to be paid. Extensive disclosure changes were required. Ultimately, the offer was unsuccessful.
Subscribe to听ASIC鈥檚 Corporate Finance Update听for more information.