Stop director margin calls
Directors of publicly-listed companies in which they also have an interest should be precluded from using that interest as collateral against margin loans, according to a spokesman for a key accountancy group.
The chief executive of accountantsRus, Adrian Raftery, said in the wake of recent events affecting at least two major publicly-listed companies in the past month, including Allco Finance Group, he believed the Australian Stock Exchange needed to regulate against company directors being able to utilise their public company’s shares as collateral against margin loans.
He said that any such rule change should also extend to their family’s company or trust investments in the public company.
“Having a chief executive officer sell a large parcel of shares sends a very bad signal to the rest of the investors, particularly the mums and dads out there,” Raftery said.
“A forced selling due to a margin call generally has the effect of a further fall in the share price, which can then lead to some panic selling by other shareholders,” Raftery said. “It amplifies the situation. It is just plain and simply wrong.”
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.