Corporate watchdog the Australian Securities and Investments Commission (ASIC) has expanded its investigation into insider trading in the superannuation industry.
Super fund executives have been put on notice for alleged breaches of insider trading laws within the industry. The watchdog alleges certain fund executives used confidential information to avoid significant losses that members had to endure.
ASIC was initially investigating 67 super fund executives for moving their personal retirement savings out of unlisted assets before they were valued lower at the start of the pandemic.
It has now added another 60 executives to the investigation, and says it is close to launching insider trading proceedings in another four cases.
“We actually expanded the scope,” ASIC commissioner Danielle Press told a parliamentary inquiry.
“We added another 60 people for the avoidance of all doubt to ensure we were erring on the side of caution. The reason those 60 people didn’t initially make our criteria was they hadn’t actually done a switch but had made other changes to their investment program that we thought were worth looking at.
“We wanted to ensure that was appropriate and not inappropriately using information they had obtained from the fund.”
The allegations are centred on whether fund executives had used confidential valuation information for personal gain.
“Directors and senior executives of superannuation funds are potentially privy to price-sensitive valuation information,” ASIC says.
“ASIC undertook this surveillance to look into concerns about whether fund executives were using this information for personal gain by switching investment options based on their knowledge of the timing of the revaluation of unlisted assets.”
News of the expanded investigation comes after the federal parliament’s Standing Committee on Economics indicated it wished to hold a hearing with Treasury and corporate regulators.
The hearing will focus on recent court decisions overturning legislation that was part of the government’s Your Future, Your Super bill that banned industry super funds paying any financial penalties with money generated by members’ fees.
Committee member and Liberal Senator Andrew Bragg told The Australian Financial Review he believes the court decisions undermine the legislation and are out of step with community expectations.
“The law is being undermined by lawless trade unions and members are paying for the trustees’ mistakes,” he said.
“The point of our reforms was that members’ retirement savings should be boosted and regulatory fines paid by the parent company. Our law is being undermined, and we are looking at all the legal and policy options for fixing it.”
Would you keep your nest egg in a fund where an executive was charged with insider trading? Should super funds be able to pay financial penalties with members’ fees? Let us know in the comments section below.
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