Anthony Rechner, the chairman and managing director of Eagle Bay Resources, which explores for both petroleum and minerals, could face a lengthy jail term when he is sentenced next week after the District Court of Western Australia handed down its verdict today.

On 16 related charges Rechner was either found not guilty or the judge found he had no case to answer.

Rechner pleaded not guilty after being charged in January last year. Each of the four charges of making materially misleading statements carries a maximum jail term of five years.

The Australian Securities and Investments Commission’s enforcement executive director, Jan Redfern, said misleading information cannot be tolerated.

“The fair, transparent and efficient operation of Australia’s capital markets is seriously undermined where false or misleading information is provided to market participants,” she said.

“Maintaining and improving confidence and integrity in Australia’s capital markets is a priority area for ASIC and strong enforcement action will be taken to support this goal where necessary.”

Following the conviction, Rechner tendered his resignation as executive chairman and a director of Eagle Bay.

Company secretary Linda Bell has been appointed to the role, while the company consults with a recruitment company to secure a managing director.

"The board and staff of Eagle Bay wish to thank Tony for his leadership and skill in acquiring and developing numerous valuable assets for the company," the company said in a statement today.

ASIC launched an investigation into an announcement and an associated media release made by Eagle Bay to the Australian Securities Exchange on September 10, 2003, after a referral from the ASX.

ASIC alleged these were materially misleading and further comment made by Rechner to the ASX and in its media release about the presence of gold and copper at the Myall Creek site were not substantiated by the results of a drilling program done four months earlier.