ASIC reveals new targets

ASIC will review analyst’s briefings given by listed entities to check that forward-looking statements are clear about assumptions and risks, says ASIC Commissioner Belinda Gibson.

ASIC will review analysts’ briefings given by listed entities to check that forward-looking statements are clear about assumptions and risks, says ASIC Commissioner Belinda Gibson.

Gibson told a conference yesterday that the downturn has sharpened ASIC’s focus on five new key areas in the next few months:

• Managed investment schemes and the disclosure of risks.
• Credit ratings agencies.
• Listed investment vehicles.
• Audit and accounting issues surrounding present valuation methodologies and disclosure for complicated financial assets.
• Market surveillance for illegal trading activities.

Gibson says ASIC will continue to review sectors in the managed investment scheme market to see how the businesses are operating and how the market should be informed about business models.

ASIC recently re-issued a draft regulatory guide for mortgage and property funds.

ASIC is also working with Treasury on a review of how credit ratings operate, recently holding roundtables with industry and consumer groups.

The review is considering the extent to which investors rely on the ratings agencies and how they deal with conflicts of interest.

Gibson says that ASIC will focus on major transactions involving listed investment vehicles that are trading at a significant discount to their announced asset value. The transactions aim to increase share price or provide an alternate exit mechanism for holders such as substantial buy-backs, buy-outs of activist shareholders, asset sales and wind-ups.

“ASIC will look at adequacy and timelines of disclosure,” she says.

ASIC will also be on the alert for substantial shareholders collaborating to force a restructure in breach of takeover provisions. “Valuation accounting will be important. Correct treatment of off-balance-sheet entities will be important, as will correct classification of debt as current or long term,” Gibson says.

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