An investigation by the corporate regulator into the way financial intermediaries handle confidential information has uncovered “serious misconduct”, says ASIC chairman Greg Medcraft.
Speaking at the 2016 Stockbrokers Conference in Melbourne yesterday, Mr Medcraft said ASIC established the taskforce in 2015 to review the way financial intermediaries manage confidential information and conflicts of interest.
The creation of the taskforce followed the publication of ASIC Report 393 – Handling of confidential information: Briefings and unannounced corporate transactions in May 2014.
According to Mr Medcraft, the taskforce has identified three main “risk areas” that are currently being tested in a review of policies and procedures, as well as through meetings with intermediaries.
“Where serious misconduct has been identified, we will refer matters to our enforcement team,” Mr Medcraft said.
More generally, ASIC has found firms often lack adequate policies for identifying confidential, market-sensitive information, he said.
There is also a “lack of appropriate separation of research, sales and corporate advisory teams”, Mr Medcraft said.
The apparent absence of so-called ‘Chinese walls’ between UBS’s advisory function and its research division led to an investigation of UBS by ASIC in April 2015.
The probe was sparked by UBS’s publication (and subsequent amendment) of a report that was critical of the Mike Baird NSW government’s plan to sell off its public electricity assets – a transaction that UBS Securities was simultaneously advising the Baird government on.
In December 2015, ASIC announced it would be taking no action against UBS in relation to the matter.
The findings of the taskforce into the handling of confidential information will be released in the next few months.