ASIC imposes enforceable undertaking on ANZ
The Australian Securities and Investments Commission (ASIC) has imposed an enforceable undertaking on ANZ Custodian Services as it seeks to facilitate a settlement of the Opes Prime issue.
The regulator announced the imposition of the enforceable undertaking at the same time as saying it would provide the necessary releases to allow a settlement offer to be put to Opes Prime investors, subject to creditor and court approval.
Under the terms of the mediated settlement, ASIC has agreed that if the offer is approved by Opes Prime creditors and the court, it will not pursue action against ANZ and Merrill Lynch.
The enforceable undertaking entered into by ANZ requires the banking group to remedy deficiencies in operational procedures across the ANZ Custodian Services business, including securities lending operations.
Among other things, the enforceable undertaking sets out the regulator’s concerns that ANZ failed to account for interests in securities acquired in the course of its securities lending business for the purposes of making substantial shareholding notifications; and failed to report any of these areas of concern to ASIC on a timely basis.
The regulator said that while ANZ had not conceded these particular concerns, ASIC considered the deficiencies impacted on ANZ’s ability to meet its obligations as an Australian financial services licensee under the Act.
It said in the event that ANZ failed to comply with the requirements of the enforceable undertaking, the regulator would assess whether it should take action to vary the conditions of the banking group's licence.
ANZ has acknowledged the enforceable undertaking, with its group managing director, institutional, Alex Thursby claiming the bank was well advanced in the remediation process.
Meanwhile, Opes Prime investors are now one step closer to being compensated for their losses.
ASIC said that based on estimates provided by the liquidator, the settlement (if approved) could deliver a sum of $253 million and a return of around 40 cents in the dollar to creditors of Opes Prime, including investors.
The proposed settlement follows mediation initiated by ASIC between it, the ANZ, Merrill Lynch and the liquidator of Opes Prime Stockbroking. The regulator said its major objective was to recover compensation for investors “without the need for costly litigation and multiple actions”.
The full advisory from ASIC can be read here.
AUTHOR
Mike Taylor
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