Ad hoc publicity and how it is connected to the most expensive TV coverage of the Swiss economy

What does this mean for the listed company's communication?

The issuer is responsible for the timely and correct fulfilment of the ad hoc publication obligation. The regulations relate to form, timing and distribution channels:

Figure: Timing Ad-hoc publication (www.ser-ag.com)

All of this requires technology that is geared towards compliance with these rules for the simultaneous distribution of the relevant information on the required sales channels. Specialized service providers such as Interaction Partners take care of this important part (see box at the end of this article).

What happens if the company fails to publish ad hoc news properly before the market opens?

Deciding whether a fact is relevant to the share price is not always easy. Failure to disclose a fact can lead to heavy fines. At the same time, a fact that is falsely disseminated as an ad hoc announcement can also be penalized. This is the case if the ad hoc announcement is misused purely as a marketing tool.

SER may impose a fine of up to CHF 1 million if the ad hoc publicity obligation is breached in terms of form, timing, and addressees. The following table shows that this is not just an empty threat of sanctions.

Figure: SER investigations and fines related to ad hoc obligations (since 2019)

Details of the individual ad hoc publicity procedures and sanctions can be found in the media releases and in more detail (usually anonymized) under Sanctions on the SER website. In most cases, the "time" factor played the decisive role.

Probably the most famous example of an ad hoc fine is the one imposed on Clariant. At CHF 750,000, it is the highest fine for an ad hoc case to date. Roughly summarized, the case involved Clariant announcing the merger agreement with Huntsman Corporation in a media release on 22 May 2017. However, Clariant had already disclosed price-sensitive information to Swiss television on 19 May 2017 with a view to broadcasting a report on the ECO program on the day of the announcement. In the program, the CEO at the time was seen discussing the deal with the Huntsman side at the Widder Hotel in Zurich. However, the merger was not announced until the next day. Due to the fine, this became the most expensive TV report in the history of Swiss business reporting.

Recommendations to fulfill ad hoc regulations

In ad hoc considerations, the behavior of market participants can never be predicted with absolute certainty and, where work is done, mistakes happen. This makes it even more important for the issuer to be well prepared. Our recommendations:

1. familiarize yourself with the subject matter

Even if the initial decision regarding price relevance is discretionary, SIX has clear regulations and guidelines for the subsequent processes. It is important to read and internalize these and to actively monitor changes.

2. define responsibilities from the outset

A team and clear responsibilities must be defined for ad hoc publicity throughout the entire process and decision tree. The top management should be involved.

3. select partners carefully

As ad hoc publicity obligations do not normally occur frequently in a company, it is worth working with partners who are familiar with the subject matter. A partner with the highest possible success rate is also needed for the technical solution of the dispatch.

4. have a plan B ready

Expect the unexpected! Even the best technology and the best people can fail. These scenarios need to be factored in and a plan B prepared accordingly. This applies not only to sending the media release and publishing it on the website, but also to uploading it to the Connexor platform. E.g., what to do if the login suddenly stops working?

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