Lack of Market Regulations

[prawn_86]

Ok so here is something which has really been annoying me lately.

Has ASIC and the ASX given up on their roles? Do they just not care? Or are they actually hamstrung by something?

A few illustrations of total lack of disclosure: (these are just the ones i am aware of without any research whatsoever, feel free to add more)

All the lack of disclosure of directors margins loans.

IRL lending MON $7mill, which is like 30% of IRLs market cap.

TTY lending OLY $2mill, when OLY was effectively broke.

Bear Stearns debacle (cant blame ASIC, but surely America has regulators)

The countless times SP queries have been issued with a "we know nothing" response, only to have a price sensitive announcement within the week.

VRE saying all good, then are in administration within a month.


Why isnt anything been done??

I understand materiality is worded in a lot of 'rules' but I think ASIC should just clear cut say, this is what you have to do. Perhaps some law buffs could touch further on this point.

Has anyone actually lodged a complaint with ASIC and recieved more than the standard "thanks we will look into it" response?

Discuss...

 

[Julia]

There was an interesting interview on ABC Radio National's programme "In the National Interest" on Sunday.

Here is the link to the interview:
http://www.abc.net.au/rn/nationalinterest/stories/2008/2189580.htm

 

[Rainmaker2000]

Having worked across these relevant areas of government, I can just say that the system does not work cause it is not designed to work......

For example, TLS knows this is the case and currently has 47 separate legal actions against the ACCC......someone tell me how the ACCC is equipped to facilitate competitive markets when they are in this predicament...the funding and expertise is just not there...

ASIC is even a tougher job and they are just funded to fail.....it is a laugh that they can regulate their relevant companies effectively.....the regulations are there, there's just no resources.....A system designed to only give the perception of effectiveness

 

[prawn_86]

Yeh those were my suspicions too Rainmaker.

So the pollies and thier business mates can virtually do what they want without fear...

Now I just have to work myself up into that position

 

[Dezza]

Most of the times the ASX questions a company about their share price, they just send a fax back saying they don't know why, then a few months down the track they come out with a trading halt and *poof*, there goes the price again this time with company reasonsing. Little bit sus sometimes, but I guess we're not working in an efficient market so you have to expect it.

How many companies are out there in the public domain being regulated? And how many people work for the regulators? Don't think they add up.

 

[prawn_86]

As an aside, does anyone know what someone working for ASIC would get paid?

Its a public servant role, so im assuming there would be a decent pension at the end of it

And by the sounds of it they dont do much. LOL

 

[Dezza]

Current vacancies: http://www.asic.gov.au/asic/asic.nsf/byheadline/Available+positions+by+title?openDocument

Current salaries: http://www.asic.gov.au/asic/asic.nsf/byheadline/Employment+conditions%2C+including+salary?openDocument

Not too bad.

 

[prawn_86]

Current vacancies: http://www.asic.gov.au/asic/asic.nsf/byheadline/Available+positions+by+title?openDocument

Current salaries: http://www.asic.gov.au/asic/asic.nsf/byheadline/Employment+conditions%2C+including+salary?openDocument

Not too bad.

Cheers Dezza,

Of course I wouldnt think of looking at the source would I

As strange as it sounds, I actually think it would be interesting working for them for a couple years. Would probably get tedious though not making any actual progress.

 

[Dezza]

Pays not too bad once you work your way up the ladder.

And as you said, I'm sure the super/pension is alright too being a govt. position.

I was thinking, what if the regulators were privatised? Bonus incentives would be to investigate a minimum of 5 companies per week and have one prosecuted at least once a fortnight to 'Meet Expectations'. (Note: forget about so-called conflicts of interest for a sec).

 

[prawn_86]

Im sure the business council would quash that idea as soon as it was out of a politicians mouth.

Good idea though...

What do others think? I reckon your onto something Dezza

 

[steven1234]

I also found it unusual that companies were issued a so called "speeding ticket" when their price was rocketing up. What happend to all the "speedings tickets" when the prices were dropping at a greater rate than they went up??

 

[chops_a_must]

Im sure the business council would quash that idea as soon as it was out of a politicians mouth.

Good idea though...

What do others think? I reckon your onto something Dezza

Then who will police the police? Coastguard?

I don't think you can privatise regulation. It just doesn't work. Far too easy to corrupt.

 

[Dezza]

ASIC Internal Affairs?

If that doesn't work, just get the TV crew from Border Security into the offices. If they can undercover a small packet of drugs hidden in a teddy bear, then they can undercover anything!

 

[happytown]

...

ASIC is even a tougher job and they are just funded to fail

...

nail, head, hamer, hit, rainmaker

resources - people and money limit their capacity

further limiting factor is the legislative reach

currently the aicd and others are further seeking to diminish the extent of duties owed by directors, to name but another hurdle

and labour isn't looking to spend more in the upcoming budget

and the courts are not a freeway devoid of traffic

and what is with that spanner in the works called discretion

one thing asicists can't be accused of, in reality, is not doing much, public perception may differ

i'd gladly accept a summer clerkship there

cheers

 

[Wysiwyg]

Pays not too bad once you work your way up the ladder.

Ahh yes, the ivory tower awaits.

Back to thread ...... this excerpt from Turbo Trader shows a good understanding of "prior knowledge". In reality it is a bit hard to trace the source but the rules are very clear in the second excerpt.

Traders know that most stocks rally on the release of a good announcement but have you ever wondered why some stocks have a surge in volume for no apparent reason?

Whilst the reason may not be "apparent" to everyone, the obvious increase in trading volume would suggest that someone, somewhere, knows something and positions are being taken in readiness.
Of course this new found interest may be purely coincidental but, if it is more than a coincidence, then there may just be a good reason to buy a few shares.

Under s1043 of the Corporations Act, the insider possessing the inside information cannot acquire or dispose of Division 3 financial products, either directly or indirectly, using inside information.

They are known as Division 3 financial products and include:

*securities including shares (which is defined in s761A of the Corporations Act)

*derivatives (as defined in s 761D of the Corporations Act)

*interests in a managed investment scheme (as described in s764A(1)(b) of the Corporations Act)

*debentures, stocks or bonds issued or proposed to be issued by a government

*superannuation products (as described in s 764A(1)(g)), other than those Superannuation products provided by a superannuation entity that is not a public offer entity, or any other financial products that are able to be traded on a financial market

.

 

[prawn_86]

In light of the recent Opes and Lift failures i thought i would bump this thread.

It seems common opinion that the regulators are hamstrung by lack of resources, so apart from gov action (which wont happen) is there anything that can be done?

 

[Julia]

Prawn, why are you so sure government intervention is not possible?

Mr Rudd is going all out fixing the world at large at present.
To address the appalling lack of regulation in the little Aussie share market shouldn't be too big an ask?

When he gets over putting things to rights with the Tibetans and the Chinese,
then perhaps thinks up a nice speech for the Japanese to appease their chagrin about left out of his current sojourn in their part of the world, I'm sure he will find time to do something about Australia.

 

[prawn_86]

Thats not some sarcasm i hear creeping in is it Julia.

Seriously though if anything was left up to politicians (either party) nothing would get done. Thank god for private industry...

My question is how can the private sector help to regualte the market better? They probably dont even want to though

 

[reece55]

My question is how can the private sector help to regualte the market better? They probably dont even want to though

Absolutely Prawnster, most entities outside of the ASX 300 see regulation as a stumbling block to going about their business....

I think one issue that needs to be addressed properly, with enforced consequences, is tracking down the substantial shareholding regime..... There have been soooo many abuses lately, it is beyond a joke and as far as I can see, ASIC really haven't been chopping heads off. Personally, I think the ASX's monitoring is fine, but ASIC needs a kick up the but....

Just my

Cheers

 

[Broadside]

In light of the recent Opes and Lift failures i thought i would bump this thread.

It seems common opinion that the regulators are hamstrung by lack of resources, so apart from gov action (which wont happen) is there anything that can be done?

for starters prawn (and I agree with you there is a major problem), the ASX shouldn't be the organisation monitoring trades...that's a gross conflict of interest as they rely on trading volume for income. The market is not transparent and the removal of broker codes by the ASX a couple of years back has made things worse.

Competition is coming for the ASX and it can't come fast enough as far as I am concerned, the ASX has let retail investors down badly.

Of course ASIC needs to be better resourced to attract talent, and have some successful prosecutions because at the moment they look inept.