He submitted rational investors would not have been discouraged from the allegations that Insignia’s former head of research, Peter Hilton, had made “suspicious trades” had it not been for some of the commentary and language used during the reporting.

However, HoustonKemp founding partner Greg Houston rejected the term “sensationalist” and told the Federal Court this week that he preferred the term “non-neutral” to describe the reports.

“The media does convey things … to gain interest. It’s quite another to suggest that the media conveys things in a way that is not precise or is inaccurate,” Mr Houston, who is an expert on the application of economics in financial and regulatory matters, told Mr Owens.

Mr Owens put to Mr Houston parts of the media reports that he claimed were sensationalist, including commentary alleging financial advisers were “psychopaths and sociopaths” or “people who have zero empathy about anyone but themselves”.

While Mr Houston said it was “certainly colourful commentary”, he did not analyse the article’s language as inflammatory.

“I don’t think we should regard it as unusual that when misconduct is disclosed, the media are engaged in commentary that might be regarded as colourful,” Mr Houston added.

When questioned on whether the commentary was suggesting to investors how to infer the disclosure of the misconduct, Mr Houston rejected this and said he did not “attach any relevance” to it.

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He also rejected an assumption that the share price may have looked different had the media not disclosed the misconduct first.

Mr Houston referred to a recent announcement from mining giant BHP, which recently admitted it underpaid staff by miscalculating holiday pay and was in the process of making restitution.

He said that while the only difference is BHP made the announcement rather than the media, there was still similar commentary.

“The reason this is not confounding news is not because the commentary is not relevant, but it is commentary on the substance and confounding news [and] that is different from the substance.

“That is a very important distinction. In all news of economics significance, there will be commentary. That’s how it works. It’s never in all my work [has] been suggested that commentary in relation to the substance should somehow be separated as confounding,” he said.

Mr Houston went on to say there would have been people who had “more sensationalist views” and others who did not see an issue.

“The beauty of the market is that all of that diversity is aggravated into something we see as the market price, and the market price reaction is the aggregation of all that diversity,” Mr Houston said.

Dallas-based senior managing director with FTI Consulting, Dr Stephen Prowse, disagreed with Mr Houston, telling the court that the event study was picking up the influence of the commentary.

“That’s because the commentary and the substance were issued together. In many cases, but not all, contrasting with a situation where a company makes a release, the media commentary does not come immediately on the same day,” Dr Prowse submitted.

The proceedings have been adjourned until late next week.