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The Australian
What Australia needs is better market regulation.
December 31, 2008
IMF fund litigator Hugh McLernon says there are numerous examples of why the ASX should adopt the zero tolerance regime that worked so well for New York city when it started arresting people for breaking windows.
McLernon says one area largely overlooked is the timing of companies reporting share sales.
For example, Lehman Brothers became a substantial shareholder of QPSX (later called Ipernica) in January 2006, holding 7.7 per cent of the stock, and thereafter had a statutory obligation to keep the company and, more importantly, the market informed of every change in its shareholding.
Documents dated and lodged on July 23 this year reveal that by April Lehman Brothers Australia had reduced its position by 4.66 million shares or 1.8 per cent and by May 16 it had ceased to be a substantial shareholder.
It failed to inform the market of either change until July 23, which is a deliberate flouting of the law.
As McLernon says: "If the biggies of the financial world are not required to comply with the statutory rules governing their procedures, then why should the little ones do so? More importantly, are these the only laws that Lehmans ignored?"
