Will anti-coal activist Jonathan Moylan receive justice if he is charged over his hoax?

ASIC, which will formally interview Moylan next week, is under enormous pressure to “make an example” of the 24-year old. It is expected he will be charged with breaching Section 1041E of the Corporations Act, which outlaws false and misleading statements designed to affect share prices. The maximum penalty is a fine of $495,000 or 10 years imprisonment.

The chorus of outrage from the big end of town has been deafening. Nikki Williams, chief lobbyist for the coal industry, was one of the first into print. Fulminating against “deliberate and fraudulent manipulation” and the use of “blatant dishonesty” to “destroy one of Australia’s biggest industries”, she later claimed the hoax has “potentially harmed an unknown number of mum and dad investors”.

Williams did not say how she knew those who lost money were parents. Others closer to the markets, including an ASX spokesman, have argued that investors (in the market for the longer term) are unlikely to have lost money. Only “high-frequency traders” who sold impulsively within the 39 minutes between the issuing of the media release and the trading halt lost money.

Speculation on short-term share price changes makes no contribution to the real economy and is an essentially parasitic. Despite commentators talking up losses of $300 million (the fleeting decline in Whitehaven’s market capitalization) in fact the total losses were less than $500,000. And for every gambler who sold at a loss there was another who made money that day.

Former Commonwealth Bank chief David Murray told the AFR the hoax “is no different from robbing someone’s house”, while Mark Vaille, once the leader of the National Party but now topping up his parliamentary pension by chairing Whitehaven Coal, could hardly contain his fury. He denounced Moylan with that cheapest of epithets, “unAustralian”, and pressured ASIC to come down hard on him.

Conservative lawyers weighed in. The Corporation Act isn’t strong enough for prominent barrister David Galbally, QC, who wants the Crimes Act extended to cover hoaxes like this one. John Keeves, partner at commercial law firm Johnson Winter & Slattery, after invoking the alleged mums and dads, called for “the full force of the regulatory hammer” to be brought down on Moylan.

Figures from the Labor Right seemed more outraged than corporate leaders. Government whip Joel Fitzgibbon urged ASIC “to make an example of this guy” so that he would “face the full force of the law”. Right-wing union boss Paul Howes told his Telegraph readers that the law is “the only thing that will stop the Greens from causing more malicious damage”.

Some humour was injected into the imbroglio when News Ltd business journalist Andrew Main suggested that the prank may backfire on the anti-coal activists because it “may have affected their own retirement planning”. Apparently, when Jonathan Moylan and his fellow activists are not campaigning against coal mines they are thinking about how to maximising their superannuation nest eggs.

Business writer Stephen Shore reminded us that Jonathan Moylan is no Bernie Madoff, but his bromide could not quell the hysteria. Others who failed to join in the scapegoating, including myself, also came under political attack."

The editorialists joined the pummelling. The Australian, naturally, led the charge, characterising Moylan as an “ecological conman” with a “delinquent mind”. A shrill leader in the Sydney Morning Herald claimed the hoax, which caused “untold harm” to investors, provides ASIC with “one of its greatest challenges”. If the regulator does not pursue the activist with “far more strenuous effort” then its reputation will be “trashed”.

And here we come face-to-face with the real threat to justice: that ASIC, urged on by business hysteria, will make Moylan the scapegoat for its past failings.

For some years ASIC has been the subject of stinging criticism for its string of litigation failures. Its cases against Andrew Forrest, One.Tel’s Jodee Rich and Trevor Kennedy of the Alpine Offset Affair, among several other high-profile prosecutions, have been thrown out of court.

The press have accused the regulator of “incompetence in conducting litigation”, incompetence that “calls into question … ASIC’s ability to fulfil its role as a corporate watchdog”. The criticism has hurt, judging by the defensive reaction of former ASIC chairman Tony D’Aloisio.

In an ominous sign, the regulator has shown its cards. In an extraordinary interview on ABC TV, ASIC Commissioner Greg Tanzer stressed the heavy penalties, including the possibility of 10 years' incarceration. He spoke as if Moylan’s prank had brought the Australian economy to the brink of collapse, jeopardising the jobs of “millions of Australians”, not to mention their retirement savings.

Those who work in corporate law describe ASIC as “media-driven” and determined to prove itself by ramping up the number of prosecutions it can put into its annual report. In its 2012 report it boasts of 14 criminal proceedings in the area of market manipulation, leading to 13 convictions and 10 imprisonments.

Jonathan Moylan, who has admitted to sending the fake media release, must look like easy meat. A successful prosecution with a long jail term would be worn as a badge of honour when ASIC executives visited board rooms in glass towers.

For others there would be the added schadenfreude of sticking it up the greenies.

But should Jonathan Moylan be made the scapegoat for share price manipulation by serious players? Should he be the whipping boy for ASIC’s history of failed prosecutions and its need to pump up its reputation in the eyes of the financial media and the politicians who oversee its budget?

If he faces prosecution, Moylan’s best hope may be to find himself before a judge who does not play golf with the big end of town.