正文
Q: Finance guys, please explain what is Chinese wall arrangement in broking business?
============================================================
Chinese wall fails: ASIC intervenes at broking house
By Lisa Murray
September 22, 2005
The Australian Securities and Investments Commission has fired a warning shot across the finance industry, taking action against stockbroking firm BBY for failing to manage conflicts of interest.
The corporate regulator said yesterday it had imposed special conditions on BBY's financial services licence after it found the broker published positive research about a corporate client it was advising. It is understood the client was mining company Universal Resources.
In the first action of its kind, the regulator said BBY had not maintained "robust Chinese wall" arrangements and had failed to follow its own compliance procedures for research reports.
As a result, BBY has been forced to appoint a consultant to review those procedures and "ensure that any necessary corrective steps are taken".
It also has to report its progress to ASIC for the next 18 months.
ASIC's head of compliance, Jennifer O'Donnell, said the scrutiny by the corporate regulator would not stop with BBY, adding that big broking firms were also being targeted under its tougher approach.
"This is not just about the small players," Ms O'Donnell said yesterday. "We are looking across the whole spectrum. We have seen a couple of matters where we had some concerns.
"This is the first one where we've taken some action but it certainly won't be the last."
Ms O'Donnell said ASIC was already in the early stages of looking at "a couple of other matters".
BBY, formerly known as Burdett Buckeridge Young, is a relatively small firm which was set up in 1987.
It has suffered from a number of senior departures over the past year. Glenn Rosewall, the former head of equities at Ord Minnett, was brought in to salvage the firm.
BBY is in hot water over a favourable research report it wrote last December about mining company Universal, which was the subject of a takeover bid by CopperCo.
BBY said in the report that CopperCo's bid significantly undervalued Universal, which was also the client of its corporate division. At the same time, BBY also organised a share placement to Xstrata.
ASIC's tougher approach follows new rules on corporate governance, which were introduced on January 1.
Doug Clark, policy executive for the Securities and Derivatives Industry Association, said the industry had been well informed about the regulator's new approach.
"We were already aware that ASIC was looking at this area and they were anxious to see what level of compliance was out there," he said.
However, he noted that broking firms were struggling with the increased cost of compliance.
"One firm's costs have gone up six times in the last three years and we can't just add a compliance levy like the airlines add a fuel levy," he said.
FINDINGS AND FOLLOW-UP
.ASIC found BBY did not follow own procedures for approval of research reports or monitor compliance of those procedures.
.Did not maintain robust Chinese wall arrangement or monitor effectiveness of such arrangement.
.BBY must now engage consultant to review compliance arrangements and ensure any necessary corrective steps are taken.
.Must report to ASIC for next 18 months on consultant's findings and corrective steps to manage conflicts of interest.
============================================================
Chinese wall fails: ASIC intervenes at broking house
By Lisa Murray
September 22, 2005
The Australian Securities and Investments Commission has fired a warning shot across the finance industry, taking action against stockbroking firm BBY for failing to manage conflicts of interest.
The corporate regulator said yesterday it had imposed special conditions on BBY's financial services licence after it found the broker published positive research about a corporate client it was advising. It is understood the client was mining company Universal Resources.
In the first action of its kind, the regulator said BBY had not maintained "robust Chinese wall" arrangements and had failed to follow its own compliance procedures for research reports.
As a result, BBY has been forced to appoint a consultant to review those procedures and "ensure that any necessary corrective steps are taken".
It also has to report its progress to ASIC for the next 18 months.
ASIC's head of compliance, Jennifer O'Donnell, said the scrutiny by the corporate regulator would not stop with BBY, adding that big broking firms were also being targeted under its tougher approach.
"This is not just about the small players," Ms O'Donnell said yesterday. "We are looking across the whole spectrum. We have seen a couple of matters where we had some concerns.
"This is the first one where we've taken some action but it certainly won't be the last."
Ms O'Donnell said ASIC was already in the early stages of looking at "a couple of other matters".
BBY, formerly known as Burdett Buckeridge Young, is a relatively small firm which was set up in 1987.
It has suffered from a number of senior departures over the past year. Glenn Rosewall, the former head of equities at Ord Minnett, was brought in to salvage the firm.
BBY is in hot water over a favourable research report it wrote last December about mining company Universal, which was the subject of a takeover bid by CopperCo.
BBY said in the report that CopperCo's bid significantly undervalued Universal, which was also the client of its corporate division. At the same time, BBY also organised a share placement to Xstrata.
ASIC's tougher approach follows new rules on corporate governance, which were introduced on January 1.
Doug Clark, policy executive for the Securities and Derivatives Industry Association, said the industry had been well informed about the regulator's new approach.
"We were already aware that ASIC was looking at this area and they were anxious to see what level of compliance was out there," he said.
However, he noted that broking firms were struggling with the increased cost of compliance.
"One firm's costs have gone up six times in the last three years and we can't just add a compliance levy like the airlines add a fuel levy," he said.
FINDINGS AND FOLLOW-UP
.ASIC found BBY did not follow own procedures for approval of research reports or monitor compliance of those procedures.
.Did not maintain robust Chinese wall arrangement or monitor effectiveness of such arrangement.
.BBY must now engage consultant to review compliance arrangements and ensure any necessary corrective steps are taken.
.Must report to ASIC for next 18 months on consultant's findings and corrective steps to manage conflicts of interest.
評論
目前還沒有任何評論
登錄後才可評論.
