It’s hard to tell which reaction has been more inappropriate to the Jonathan Moylan-Whitehaven Coal hoax. Was it the Australian Securities and Investments Commission, Australia’s usually timid corporate regulator, which allowed scores of executives and directors to walk away from smouldering companies, or the financial media, who not only perpetuated the hoax, but completely fail to understand the effects?

Then there are concerns that Moylan’s prank may have damaged the “integrity” of the market. Leaving aside the fact that sharemarkets have never had much integrity anyway (anyone who doubts that need only look at the share price of companies prior to “confidential” takeover announcements being made) — those who actually lost money as a result of the Moylan hoax were both foolish and greedy.

Anyone who sells shares in a company within a couple of hours based on an announcement by a bank is not an investor, but a speculator, or more aptly put, a gambler. In this regard, it is interesting to note Warren Buffett’s comments last month where he opined that sharemarkets have turned into a “casino game”. Not only were Whitehaven shareholders who sold their shares based on the hoax announcement gamblers, but they were foolish gamblers. Investors with any sense would immediately check the ASX website (where all official company announcements are made) after reading a release — to check both its authenticity and the company’s response (for example, in a real instance of a bank withdrawing finance, Whitehaven may have also announced that it had obtained another financier).

In addition, banks would virtually never issue a press release declaring that they are pulling a loan — it’s not great for business.

But those facts haven’t stopped the media from casting Moylan as a Bond-esque villain, operating from his forest hideaway north of Sydney. The fact that Moylan also didn’t profit, nor did he seek to profit, from his actions appears to have been largely forgotten.

The conduct of Australia’s regulator, ASIC, which appears to have finally been stung into action after years of lethargy, has been even more bemusing. Within days of the hoax, ASIC officers had raided Moylan’s forest campsite, seizing his laptop and a mobile phone.

While the publishing of misleading information is not to be condoned, it appears that ASIC’s reaction to Moylan’s alleged crimes is somewhat heavy-handed, especially when compared to ASIC’s complete belligerence during and since the global financial crisis.

My book, Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed, detailed numerous instances where large, ASX-listed companies provided misleading information to shareholders. In those instances, executives at these companies (unlike Moylan) personally benefited from their illicit actions — most commonly in the form of remuneration and bonuses, but also in the sale of shares at inflated prices. This was especially the case for Allco Finance Group, ABC Learning Centres and MFS — three high-profile GFC-era collapses.

“In ASIC’s eyes, it appears a hoax letter which is discovered within a few hours is worse than running a complex scheme to mislead and defraud investors …”

ASIC has never taken any criminal action against any director of the collapsed Allco Finance Group, including multi-millionaire former directors like David Coe and Gordon Fell. In 2006, Allco provided financial statements to investors which were incorrect (they were restated by Allco a month later).

However, a far worse error was made the following year when Allco told shareholders that it had current liabilities of $193 million — a mere five months later Allco would confess that its actual current liabilities were $2.3 billion. The following year Coe and Fell arranged for the sale of Rubicon (which they owned) to Allco for more than $70 million in cash. Within weeks, Rubicon’s auditor claimed that the trusts may not be able to continue as going concerns (a fact that Coe and Fell forgot to mention to Allco shareholders). Finally, Allco would provide a $52 million “line of credit” to a trust owned by Allco executives including Coe as the company was sinking towards insolvency — those funds would never be repaid.

Unlike Moylan, Coe and Fell remain very wealthy men. Fell’s wife purchased a $27 million harbourside property shortly before Allco’s collapse, while Coe sold a harbourside property for $47.5 million and continues to maintain various lucrative interests such as a stake in the Sports and Entertainment Limited business. ASIC has never laid a single civil or criminal charge against David Coe, Gordon Fell, or any executive or director of Allco.

Nor did ASIC ever take any criminal action against Eddy Groves (or other directors of ABC Learning Centres) over allegations that the company maintained what appeared to be a Ponzi scheme. The scheme involved ABC booking payments from developers as revenue, when in reality, the payments were actually coming from ABC. ABC’s treatment of developer payments would allow it to report far higher profits than was actually the case. ASIC would eventually charge Groves with a relatively minor offence involving the purchase of childcare centres from another ABC director, but those charges were quietly dropped last year.

In ASIC’s eyes, it appears a hoax letter which is discovered within a few hours is worse than running a complex scheme to mislead and defraud investors and lead to losses of hundreds of millions of dollars.

ASIC also didn’t feel it appropriate to bring criminal charges against any executive or director of MFS (it launched civil action in 2009, but nothing appears to have progressed in several years). This was despite MFS reporting to shareholders in 2007 that it made a profit of $184.9 million, had virtually no short-term liabilities and had net assets of $1.54 billion. Those figures would appear somewhat optimistic, given the company was placed in administration nine months later. Those misleading financial results would allow MFS to justify a multi-million dollar bonus payment to founder and CEO, Michael King. The actions of MFS directors would appear to have done far more to “damage the integrity” of the ASX than the issue of a fake press release which was never posted on the ASX website.

The Whitehaven hoax has shown clearly that there are certain rules for the wealthy and powerful, and a completely different set of rules for coal activists living in a forest.