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Wilson rises to SMSF battle with ASIC

The-Inside-Adviser-Assets_26:11:20

Geoff Wilson of Wilson Asset Management fame and the Stock Brokers and Financial Advisers Association have joined with the SMSF Association in attempting to get fairer access for small investors in company capital raisings. ASIC is in their sights.

In a webinar organised by the SMSF body yesterday (November 25), coinciding with SMSF Week, Geoff Wilson, who is no stranger to battles waged on behalf of small investors, said: “We want a level playing field for retail investors. They’ve missed out during COVID. In fact, they’ve missed out since 1997 with a change to companies law… I’m a wholesale investor. [WAM] manages about $7.5 billion for 90,000 investors – mainly retail investors – and we get what I believe is an unfair advantage.”

John Moroney, SMSF Association chief executive, said that ASIC’s website says that it regulated the industry for All Australians. “But to me it looks unfair,” he said. “Our members say so and other commentators say so. I’d like to see ASIC take a closer look at this.”

He and the others were prompted to criticise ASIC by the ASX decision in conjunction with ASIC to change the limit on private placements by listed companies during the COVID crisis. The decision, announced on March 31, was for “temporary emergency capital-raising measures to help companies, especially by allowing the 15 per cent placement capacity to be lifted to 25 per cent”. The ASX relief has been extended from the end of July to the end of November and the ASIC relief has been extended until the end of December.

Moroney published an article about the issue in July which attracted the attention of Wilson, leading to the well-received members’ webinar yesterday.

Wilson said about half of the money raised over the past 10 years had been through placements, which don’t require a prospectus, and mostly at a discount. “Since April, there has been $30 million raised, with a significant amount through placements at an average discount of 17 per cent to pre-issue price. So, the opportunity cost for small investors in that is about $6 million,” he said.

“In New Zealand they don’t have this situation. In 2014, they levelled the playing field, allowing all investors to participate in placements. The Government does have to look after all shareholders.”

Wilson last entered the political ring in the lead-up to the last Federal election when he successfully organised a campaign attacking Labor’s plan to cut the worth of franking credits. Some political commentators suggest the campaign was possibly the most crucial reason Labor failed to gain office.

Brian Sheahan of SAFAA, said that the poor bargaining position for small investors had a lot to do with the evolution of the capital markets. After the rise of big investment banks in the 1980s, when they took over a lot of independent stock brokers, they decided to concentrate on institutional investors.

“SMSFs became an afterthought,” Sheahan said. “The guardians of the small investor, the retail stock brokers, were sucked up and left without power.”

He said that the regulator appeared to have a preference to hear from the big end of town rather than retail investors.

Moroney said that small investors held an estimated $221 billion in listed shares as at the end of last year, so many people were missing out on significant opportunities. His three main suggestions to make the system fairer were:

  • Make large companies structure their offers so that a proportion of any placement is set aside for small shareholders, perhaps in the same ratio as the small holders are represented on the company registry
  • For ASIC to publish, in aggregate form, the disclosures by companies made in private when undertaking placements, so there is transparency, and
  • Develop a single digital platform for retail investors.

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