UBS escapes punishment over ‘poles and wires’ research

Tim Stewart
— 1 minute read

ASIC has decided to take “no further action” in relation to UBS’s involvement in the NSW government’s sale of electricity infrastructure in March 2015.

UBS was the NSW government’s corporate adviser on the sale of public electricity assets (‘poles and wires’) in the lead-up to the NSW state election on 28 March 2015.

The research arm of UBS Securities published a report about the ‘poles and wires’ assets titled Bad for the budget, good for the state on 17 March.


However, 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.

NSW Premier Mike Baird has acknowledged that his office contacted UBS after the original report was released.

InvestorDaily asked ASIC chairman Greg Medcraft on 23 March about the apparent breakdown of the ‘Chinese walls’ within UBS’s research and corporate advisory divisions.

“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 at the time.

In a statement released yesterday, ASIC said it had completed its inquiries in relation to the UBS report.

“Following those inquires and in view of the remediation which UBS has undertaken, ASIC has determined to take no further action,” said the regulator.

“ASIC was concerned that UBS Securities’ control framework relating to its research function, and its compliance with that framework, at the relevant times was not adequate for an investment bank of UBS’s size and complexity. UBS Securities has acknowledged these concerns,” said ASIC.

The regulator said it is satisfied with the remedial actions UBS is taking to “improve its control framework relating to its research function”.

The measures UBS is taking include the appointment of additional supervisory roles at UBS Securities’ research department; the appointment of an additional ‘compliance resource’; the establishment of a research executive committee; improved training for UBS staff; and the publication of guidance for analysts regarding sensitive information.

UBS Securities has also appointed an independent expert to review the implementation of the remedial measures.

“[The independent expert will] certify to ASIC on a quarterly basis for the first 12 months and then on a six-monthly basis for the following two years that the measures have been implemented and maintained,” said ASIC.

“Should ASIC determine that any of these changes have not been fully implemented or maintained, it would be open to ASIC to take appropriate action, including enforcement action where warranted,” said the regulator.

ASIC has also decided to 'take no action' in relation to UBS research on Newcrest Mining published on 5 June 2013.

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UBS escapes punishment over ‘poles and wires’ research
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