‘We review all trading’: ASIC grilled on dealing with overseas short-sellers

During a Senate committee on Wednesday, senator Paul Scarr questioned ASIC commissioner Cathie Armour on the subject, citing ASX-listed agricultural investment firm Rural Funds Group who was the victim of a short-selling attack by Texas-based Bonitas Research in 2019.

Bonitas claimed the firm was fraudulent, resulting in its share price dropping by 42 per cent in just 30 minutes. 

Ms Armour was asked by Mr Scarr if ASIC is doing enough to take on overseas short-sellers who are “flouting Australian laws”.

“We review all trading that occurs on the Australian markets,” Ms Armour responded.

“We monitor the markets to see what short positions there are in stock. We enforce the short selling laws which actually, in Australia, do not allow naked short selling.

“We go and monitor situations where it looks like there could be some naked short selling. We ensure that doesn’t occur.

“When we see someone from overseas issuing a shortened report, we ask ourselves ‘how did that report get to Australia?’ We ask ourselves ‘is this person providing financial services in Australia in a way that’s not permitted?’

“We speak with our regulated counterparts overseas about what action they may take. We examine what is said in the report. We sit down and we go and examine the allegations in the report and see whether or not they are inappropriate.

“We look at the social media sites and we look to see whether or not there is some sort of manipulative approach being taken more broadly.”

Ms Armour added that Mr Scarr’s question was valid and that she “totally” agrees short-selling is a priority. 

“This is an that area that we need to be focused on and doing our hardest work on,” she said.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.