ASIC to watch unsolicited share offerer
The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking from an Adelaide man who contravened the Corporations Act when he made unsolicited offers to purchase securities.
Carmine Mercorella, the sole proprietor of Unmarketable Parcels, made several unsolicited offers to purchase securities off-market from shareholders in BKM Management, Jumbo Corporation, Oropa, Natural Intelligence (now Commoditel), ICE Corporation and Entertainment Media and Telecoms Corporation late last year.
ASIC reviewed the offers and decided each had contravened provisions of the Act, which were introduced in January 2004 to regulate unsolicited offers to purchase securities.
In particular, Mecorella did not inform shareholders that he could have withdrawn the offers by sending them a withdrawal document, and the offers included a term that they could lapse less than one month from the offer date.
Each offer also contained conditions that Unmarketable Parcels would not be obliged, before Mercorella sent the money, to purchase the shares if the share price fell below a certain level or the stock was suspended from trading from the Australian Stock Exchange.
ASIC was also concerned that Mercorella had not sent a supplementary document advising shareholders in Commoditel that the shares’ market price had increased by more than 50 percent during the offer period.
The enforceable undertaking was provided to ensure unsolicited offers Mercorella makes to purchase securities over the next five years are overseen by an independent compliance expert, and that future offers are made in accordance with consumer protection requirements under the Corporations Act.
Enforceable undertakings are accepted as an alternative to civil or administrative action where an individual or company has contravened the legislation ASIC administers.
ASIC’s deputy executive director of enforcement, Allen Turton said the action demonstrates ASIC’s commitment to ensuring unsolicited offers to purchase securities off market comply with the law.
“ASIC continues to closely monitor those who make unsolicited offers to shareholders. We will take action in circumstances where the investors’ interests may be compromised by a failure to meet legal obligations,” he said.
Recommended for you
The top five licensees are demonstrating a “strong recovery” from losses in the first half of the year, and the gap is narrowing between their respective adviser numbers.
With many advisers preparing to retire or sell up, business advisory firm Business Health believes advisers need to take a proactive approach to informing their clients of succession plans.
Retirement commentators have flagged that almost a third of Australians over 50 are unprepared for the longevity of retirement and are falling behind APAC peers in their preparations and advice engagement.
As private markets continue to garner investor interest, Netwealth’s series of private market reports have revealed how much advisers and wealth managers are allocating, as well as a growing attraction to evergreen funds.
