Dumb ASIC caused the 'poor corporate culture' by listening to corrupt 'gate-keepers.'
Australian Securities and Investments Commission in trading crackdown
June 3, 2016 12:00am
Herald Sun
THE investment and corporate watchdog has launched a crackdown on the Australian stockbroking industry, vowing to boost surveillance and bring an end to poor corporate culture.
The Australian Securities and Investments Commission is also increasing efforts to identify conflicts of interest, dodgy research and insider trading.
ASIC chairman Greg Medcraft told a conference of stockbrokers in Melbourne yesterday that leaks involving confidential and market-sensitive information threatened Australia’s share market integrity, damaged investor confidence and increased the risk of insider trading.
ASIC’s new taskforce to oversee the security of confidential information had already found poor practices among
brokers, Mr Medcraft said.
These included inadequate identification and handling of information, lack of separation between research, sales and advisory divisions, and concerns about staff trading activity.
Biased research from stockbrokers was also a potential concern, he said, when investors were drawing on their investment reports and company valuations.
Mr Medcraft told the Stockbrokers Association of Australia annual conference that ASIC also had concerns about staff and principals’ share trading activities.
These included trading when the broker had been involved in advising on capital raisings and trading contrary to research recommendations by staff involved in influencing the research reports.
“Market integrity matters to us all. Financial markets facilitate the raising of capital and the efficient allocation of resources and risk. They can’t do this without the trust and confidence of investors,” Mr Medcraft said.
“If you don’t trust that our markets are operating fairly, you won’t invest your money in them. If lots of people feel and act this way, market liquidity will decrease.”
The head regulator said maintaining a corporate culture that put the customer first was imperative. “Firms that do not have a good culture risk losing their customers to firms that do,” Mr Medcraft said.
Australasian Investor Relations Association chairman Warwick Bryan said while Australia had a good reputation for market integrity, he welcomed the increased focus by ASIC. “It’s important the regulator ensures the market is well policed,” Mr Bryan said.
“By world standards we are seen as well regulated, foreign investors feel comfortable investing here. But no market is perfect, which means it is encumbent on ASIC as the regulator to come down hard when something is done to undermine it.”