ASIC reportedly knew of Opes Prime’s breaches of mandatory...

ASIC reportedly knew of Opes Prime’s breaches of mandatory capital liquidity thresholds in early February. Yet the watchdog did not take action, despite Opes being in contravention of its financial services licence.








ANZ, ASX & ASIC feel heat from Opes Prime meltdown
Tuesday, 15 April 2008
Marko Barosevic

The ANZ bank, Australian Stock Exchange and regulator Australian Securities and Investments Commission are facing mounting criticism for their roles in the failure of Melbourne broker Opes Prime.

New ANZ chief executive Mike Smith has announced a wide ranging review into the Opes Prime affair. ANZ was owed $650 million when the broker collapsed, controversially seizing the shares of Opes clients, who claim they were unaware their portfolios were used as collateral for Opes borrowings.

Smith will chair the internal review and has enlisted respected BHP board member David Crawford to help steer the investigation.

ANZ will be reconsidering the future of its exposure to stock lending activity.

The bank has exposure to another Melbourne margin lender Chimaera Capital. The Australian Financial Review reports ANZ has a $500 million charge over companies associated with Chimaera, which is reportedly the subject of persistent rumours and has so far declined to comment. ANZ was also linked to Tricom Securities.

Smith told Business Spectator: “It’s very much care and maintenance and really just managing what we’ve got. They will certainly be doing no new business.”

Four ANZ staffers from its securities lending division, including operations manager Nick Harding, have been suspended pending an investigation into conflicts of interest. It is alleged that the employees held accounts with Opes, and may have participated in improper transactions. Opes founder and chief executive Laurie Emini was a former ANZ employee.

“If there is any impropriety at all or any actions against the ethics with which we run the business, they will be dealt with accordingly… They (staffers) can expect absolutely zero tolerance from me,” Smith reportedly said.

Jim Berry, the former top man of surveillance at the ASX, has criticised the lack of regulatory oversight and enforcement over the Opes Prime bust.

Berry singled out the use of complex off-balance sheet structures to hide the real liability picture.

“It’s very dangerous. The ASX is monitoring the stockbroker, but where the broker can keep assets and liabilities in other parts of the business… you create the potential to avoid supervision,” he reportedly said.

ASIC reportedly knew of Opes Prime’s breaches of mandatory capital liquidity thresholds in early February. Yet the watchdog did not take action, despite Opes being in contravention of its financial services licence.


There are court cases playing out in the Federal Court over ANZ’s entitlement to the shares of Opes clients in the wake of the collapse.

A key question to stem from these hearings will be whether ANZ was required to lodge notices of substantial shareholding (5%) in a large number of small cap companies to the ASX. Within that group are a number of companies where formal takeover offers may have been required.