ANZ is under the gun from the Australian regulator following an alleged breach of continuous disclosure rules during a 2015 capital-raising exercise.
In a document lodged with the Victorian Federal Court last Friday, the Australian Securities and Investments Commission (ASIC) argues ANZ breached ASX disclosure rules after failing to declare that underwriters picked up almost a third of a A$2.5 billion share placement “owing to the inadequate level of demand from institutional investors”.
Under the August 2015 offer, ANZ issued about 80.8 million shares at A$30.95 per share – a discount of almost $2 on the prior traded price – in a deal underwritten by Citigroup, JP Morgan and Deutsche Bank.
Ultimately, the three underwriters assumed over A$791 million of the ANZ shares split between them almost equally. However, that “information was not generally available to the market at the time”, the ASIC court document says.
The regulator says if the “substantial” underwriter allocation had been released – as per ASX listing rules requiring disclosure of price-sensitive information – then potential ANZ share=buyers may have delayed purchases while “sophisticated traders” could have shorted the stock.
In the day following the issue ANZ shares traded between A$29.80 and A$30.14.
“The harm alleged is ANZ’s contravention of s.674(2), by which the market was deprived of information which the [Corporations] Act intended should have been available to it,” the ASIC court statement says. “The purpose of imposing the obligation of disclosure in s.674(2) of the Act is to facilitate the fair, effective and efficient operation of Australian markets for securities and to preserve and foster the reputation of Australian listing markets as fair, orderly and transparent securities markets.
“That purpose was frustrated by the non-disclosure.”
ASIC is seeking a statement of admission from ANZ plus a “pecuniary penalty”.