Archived News for Finance Sector Professionals - July, 2011

Sonray Capital Markets chief executive of finance is facing jail time for his role in stealing funds and making false and misleading account entries valued in the millions of dollars.

Incoming Commonwealth Bank of Australia (CBA) chief executive Ian Narev has vowed to continue the bank’s aggressive customer-focus overhaul after he takes the reins in December.

The two chiefs of the failed broking firm Opes Prime have received jail sentences for their role in the collapse of the company.

Westpac has announced it is currently considering launching a new internet-only banking service, to be known as Red, that will form part of Westpac’s multi-brand strategy.

The National Australia Bank has poached as many as 60 Axa Asia International financial planning businesses after the Australian Competition and Consumer Commission (ACCC) blocked a similar move last year.

The Australian Taxation Office (ATO) has ruled that partners and adult children can face substantial tax liabilities after the death of a parent or partner.

QBE has announced that it will split its Australia and Asia-Pacific operations as the bank prepares its aggressive expansion strategy across the Asia region.

The National Australia Bank has announced it will keep its UK subsidiaries, but is refusing to comment on speculation on if it will make a move on the 632 retail branches of Lloyds’ bank.

Former directors of now insolvent Opes Prime Stockbroking Lirim Emini and Anthony Blumberg have pleaded guilty to charges relating to the collapse of the firm in 2008.

New South Wales has succeeded in its bid to host the Centre for International Finance and Regulation in Australia.

Westpac has bucked the trend of other banks and has voiced its expectations that the Reserve Bank of Australia (RBA) will drop the cash rate by a full percentage point over the coming year.

The Institute of Public Accountants (IPA) is seeking to establish client privileges for accountants similar to those enjoyed by lawyers in protecting their tax advice to clients.

A majority of economists surveyed by the Economic Society of Australia at the Australian National University (ANU) have supported the implementation of the Federal Government’s planned carbon tax as a sound economic policy.

The simplification of Australia’s ‘inordinately complex’ personal tax system has caused concern for the future of Australia’s 40,000 tax assistants.

The Australian Securities and Investment Commission (ASIC) has released a consultation paper outlining proposals to improve disclosure for retail investors considering investing in unlisted property schemes.


The proposals follow an ASIC review of disclosure documents issued by responsible entities in the $28 billion unlisted retail property sector.


ASIC found a number of key disclosures were not adequately addressed, including:

The Australian Securities and Investment Commission (ASIC) has published its second report on the supervision of markets and participants.


ASIC assumed responsibility for market supervision and real-time surveillance of trading from ASX on 1 August 2010. ASIC also supervises compliance with market integrity rules, compliance with the Corporations Act 2001 and ensures that Australian financial services licence conditions are met by market participants.


ASIC Commissioner Shane Tregillis said, “ASIC is building investor confidence by ensuring Australian financial markets are efficient and fair. We are doing this through thorough surveillance of the market and by taking pre-emptive action to prevent possible market misconduct. We are increasing our engagement with industry and providing education and guidance to participants.


“However pre-emptive engagement will not replace deterrence and when we find serious market misconduct we are taking timely deterrence action. Market participants and operators are important gatekeepers and we expect them to have controls in place to ensure conduct in accordance with required standards and to demonstrate a culture of compliance,’ said Mr Tregillis.


Report 243 ASIC supervision of markets and participants: January to June 2011 (REP 243) identified that during the reporting period there were 23,494 trading alerts, with 121 matters requiring further consideration. Some 35 matters were referred for investigation. These matters involved potential insider trading (17), market manipulation (6), possible breaches of the market integrity rules (10) and of continuous disclosure obligations (2).


In addition to the 35 markets matters, a further eight participant matters were identified during ASIC’s participant surveillance visits and referred for investigation – three of which relate to supervision of representatives. Prevention of unauthorised trading and appropriate supervision of representatives are key themes addressed during our visits and ASIC expect participants to have appropriate controls and culture in place.


Matters concerning order management including problematic algorithms and orders for some exchange-traded funds (ETFs) have been identified in our work with participants. ASIC is continuing to work with market participants and their clients to reduce the risk of algorithms having a negative impact on market integrity and to ensure that orders from retail clients for ETFs are not priced significantly from their intrinsic value taking into account the value of the underlying reference asset. For example we have identified a number of instances where index ETFs have traded well away from the price of the underlying index.


Analysis of potential insider trading matters has identified some instances where corporate advisers have not had appropriate controls in place to ensure that there is restricted access to price sensitive information.


The time taken to commence investigations from misconduct identification has continued to fall with approximately 40% of all referrals progressing to investigation in under 30 days from identification of the misconduct.

A $10 billion Clean Energy Finance Corporation to invest in the commercialisation and deployment of renewable energy and enabling technologies, energy efficiency and low-emissions technologies has been announced as part of the Federal Government's carbon price package.

Official figures released by ASIC reveal that corporate insolvencies have risen 4.4% in the 2010-11 financial year to date.

ASIC’s Senior Executive Leader of the Insolvency Practitioners team, Adrian Brown, said that despite a decrease in external administration appointments in May compared to the same time last year, the latest figures show the number of court liquidations and director initiated creditors voluntary liquidations have risen.

‘Statistics collated by ASIC up to and including May 2011, show court liquidations in Australia rose 8.6% and director initiated creditors voluntary liquidations rose 7.6%.
Western Australia is also seeing its fair share of corporate insolvencies, despite suggestions that it’s in the fast lane of a two speed economy,’ Mr Brown said.

‘Interestingly, receivership and voluntary administration appointments, Australia-wide, have fallen,’ Mr Brown added.

ASIC publishes monthly insolvency statistics detailing the number and type of corporate insolvency appointments. External administrators, (liquidators, receivers and managers and voluntary administrators) are obliged by law to advise ASIC of their appointments.

A consortium headed by the University of New South Wales has won the tender for a $41 million Centre for International Finance and Regulation.

Medicare will be responsible for the administration of early release of superannuation on compassionate grounds following the introduction of new legislation into Parliament.