The corporate regulator has issued a 'please explain' request to UBS following the investment bank’s retraction of a report criticising the NSW government’s planned privatisation of electricity assets.
UBS, which is the NSW government’s adviser on the so-called ‘poles and wires’ project, released a report last week titled Bad for the budget, good for the state.
But within hours the report was recalled and re-released with the title Good for the state, with some parts critical of the plan removed and a section on the benefits of the proposed privatisation added.
Speaking to InvestorDaily at the ASIC Annual Forum in Sydney yesterday, ASIC chairman Greg Medcraft said the regulator has issued notices to UBS and is “looking at the matter”.
In particular, ASIC has asked UBS about the operation of its ‘Chinese Wall’ (that is, the systems in place that separate the investment bank’s advisory arm from its research arm).
“We know about the issue, what happened with the report and the separation of the two [functions] and we’re looking at it,” Mr Medcraft said.
Having looked at the report himself, the ASIC chairman said the fact the report was released at all indicates UBS has some “internal control issues”.
“Having a background in infrastructure financing, when I looked at the report clearly there were some issues in terms of [UBS’s] own internal controls in terms of what research goes out and how it’s vetted,” he said.
NSW Premier Mike Baird has acknowledged that his office contacted UBS after the original report was released.
Labor has leapt on the issue ahead of the NSW state election on Saturday 28 March.
According to The Guardian Australia, NSW Labor MP Michael Daley referred the matter to ASIC, asking the regulator to investigate who within the premier’s office called UBS.
“Research analysts from banks must be left alone to issue their reports without pressure from clients and without pressure from government, that is the law.
“I believe either Mike Baird or one of his staff breached that principle,” Mr Daley said.