ASIC focuses on ‘sophisticated investor’ certificates

The corporate regulator is placing focus on accountants who could be harming retail investors by inappropriately providing “sophisticated investor certificates”.

The Australian Securities and Investments Commission (ASIC) said it was concerned that some accountants had facilitated retail investors acquiring shares offered by a company without adequate or any disclosure.

ASIC said it was aware that in certain recent fundraising, some accountants had used trust or company structures that purport to allow investors who are not “sophisticated investors” to receive offers to purchase shares without a prospectus or other disclosure documents.

It said that had recently occurred in relation to offers of shares by Kwickie International Limited.

“ASIC has made a declaration, to put the issue beyond doubt, that Kwickie International Ltd shares may not be offered to retail investors through a trust structure. ASIC is continuing its investigation into the use of these structures,” ASIC said in an announcement.

“ASIC is also in discussions with the appropriate accounting professional bodies about this issue.”

The corporate regulator said that it was important that the “sophisticated investor” test was applied in a way that was consistent with the reason these provisions are in the law.

“Otherwise ‘retail investors’ will not be afforded the safeguards in making appropriate investment decisions that the law explicitly provides for,” it said.

“ASIC also notes that accountants need to be careful not to recommend or otherwise provide financial advice unless licensed.”

Under the Corporations Act accountants are to provide a certificate of attesting to the assets or income of a person the accountant can attest that a person is a “sophisticated investor” and therefore does not need the protections that apply to a “retail investor”.

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