ASIC wins case against Centro Directors

On 27 June 2011, ASIC reported that it had been successful in its case against eight directors and former executives of Centro Properties Group. ASIC Chairman, Mr Medcraft said the Courts judgment on the legal duties of directors and management sent a clear message to boardrooms across the country about corporate accountability.

In his decision, Middleton J said,
'A director is an essential component of corporate governance. Each director is placed at the apex of the structure of direction and management of the company. The higher the office that is held by a person, the greater the responsibility that falls upon him or her. The role of a director is significant as their actions may have a profound effect on the community, and not just shareholders, employees and creditors.'

Mr Medcraft also said there was a minimum standard of boardroom participation that directors must meet. This means the key elements of a company’s financial position are something directors should understand and be able to communicate accurately to the market.

A penalty hearing is to be scheduled.

Further details are available here.

Australia, Germany join the short selling disclosure fiesta

The following appeared on the ASIC website today:

0-42AD Short position reporting

Friday 5 March 2010


ASIC today has announced decisions made in relation to the following provisions introduced in the Corporations Amendment Regulations 2009 (No 8) (SR No 327 of 2009) (Short Selling Regulations):

•  
  • to delay the commencement of short seller obligations to lodge short position reports from 1 April 2010 to 1 June 2010; and
  • to reschedule the commencement of ASIC obligations to publish aggregated short position reports from 1 April 2010 to 21 June 2010.

The change in the commencement of the short seller’s obligation to report its short positions will allow short sellers more time to ensure they have the appropriate systems in place to meet their reporting obligations.

ASIC will facilitate an industry-wide pilot test to allow short sellers access to the new reporting infrastructure from 10 May 2010.

Additional information

To assist short sellers and systems developers adequately prepare for the new reporting requirements, ASIC has also revised Information Sheet 98, now titled Short selling: Short position reporting (INFO 98).

INFO 98 includes key tasks and practical information which stakeholders must be aware of prior to the revised start date for the reporting requirements. INFO 98 also contains details relating to the threshold for short position reporting and other technical amendments, as well as information about the FIX Rules of Engagement. In the period leading up to implementation, ASIC will regularly update INFO 98.

ASIC will shortly publish a revised Regulatory Guide 196 Short selling (RG 196). This document will contain more details about the decisions described above. Other updates in this document will reflect recent changes in the law, some exemptions provided to allow for certain naked short selling and guidance in relation to the disclosure and reporting requirements that apply.

Questions about short position reporting can be directed to shortpositionreporting@asic.gov.au or visit www.asic.gov.au/shortselling. for further information.

And in Germany:

Bloomberg Europe reports that "Germany’s financial regulator Bafin published rules requiring disclosure of short selling in stocks of banks and insurance companies including Deutsche Bank AG, Commerzbank AG, and Allianz SE, partially implementing a Europe- wide regulatory proposal."

These new developments follow on from the announcement in Hong Kong earlier in the week but more importantly from the announcement of its report into Hedge Fund Systemic Risk reporting by IOSCO.

Australian PJC recommendations for Financial Advisors

On 24 November 2009, Investor Daily reported that the Parliamentary Joint Committee (PJC) on Corporations and Financial Services Inquiry into Financial Products and Services in Australia had released its recommendations. The recommendations focused on, but were not limited to, financial advising. 

The most significant recommendations are detailed below. The recommendations will require changes to legislation, regulations, regulator powers and an increased reliance on industry associations. Key recommendations are:

• Recognition the fiduciary duty by financial planners to put the interests of their clients first
• Overhaul of commission payment system to avoid conflict of interests and volume bonuses
• Making the cost of financial advice tax deductible for consumers.
• ASIC to work together with the industry to form a professional standards board that advisers would be required to join. The body would establish, monitor and oversee competency and conduct standards.
• ASIC to be resourced to perform risk-based surveillance of the advice provided under an Australian financial services licence.
• Extending ASIC powers to remove individuals and licensees from providing financial services.
• The government to investigate options for a last resort compensation scheme

These recommendations were the result of a significant consultation process and have been welcomed by many industry associations. As reported in Investor Daily’s article, FPA chief executive Jo-Anne Bloch said the recommendations will improve professional standards in the industry. "Recognising that duty of care is a fiduciary duty enshrined in law will lift the conduct and standards of the industry. Giving ASIC risk-based surveillance powers is proactive regulation," Bloch said.

For further information please see PJC Article