The corporate regulator has warned brokers of managed discretionary accounts (MDA) they are in its sights as part of a proactive strategy to deter crime and protect investors.
ASIC deputy chair Belinda Gibson said issues surrounding MDAs were a concern.
“We’re looking into a lot of brokers in that regard – not necessarily finding something, but it is part of our proactive surveillance, looking at the oversight of the face-to-face brokers.”
Asked whether ASIC was putting MDA brokers on notice, Gibson said: “Absolutely.”
ASIC chair Greg Medcraft said the MDA sector was a good example of the regulator’s proactive regulation.
“Look, this is an area of risk. For the market, the law is the law, but at the same time we’re basically saying, ‘What can we do to make sure this sector is more resilient?’ We are focusing on the area in terms of surveillance, and frequency and intensity of surveillance.”
Medcraft and Gibson made the comments at a press conference yesterday.
Asked whether disclosure by companies in talks with potential private equity buyers was a focal point, Gibson said: “In principle, private equity versus anyone else? No.”
She said it was difficult to force a company’s hand when it was in talks with a private equity company because putting the information in the public domain would often mean prejudicing the offer and violating confidentiality agreements.
However, she said trading of a company’s shares was a focal point.
“What we are very alert to is if there is some suspicious trading before it [a potential takeover deal] is in the public domain,” she said.
“In a lot of instances where there is suspicious trading before takeovers, we’re now asking for dealer lists of who traded.”
Medcraft said the concern over stocks trading prior to a takeover deal covered hedge funds, as well as private equity.
“One concern that’s specific to hedge funds and private equity is we will be focused on looking at activity that occurs prior to any announcement,” he said.
“It’s a very strong message to anyone who’s considering contemplating anything: It’s probably not worth considering it.”
