Directors and insider trading: a solution Despite a comprehensive Regnan and now ASX report, the vexed issue of directors trading shares in their own companies remains the great unspoken. The two studies comprehensively show that not only are directors failing to disclose their shareholdings in a timely manner, but they also appear to be breaching insider trading provisions. Last Friday, the ASX announced that “of the 4137 notices lodged [between 1 January and 31 March 2008] … 538 (13%) breached the ASX Listing Rule requirement to disclose to the market within five business days. Of these 538 breaches, 289 (7%) also breached the Corporations Act by failing to disclose to the market within 14 days.” This situation is a complete farce. Directors are breaching their duty to shareholders by failing to disclose their holdings, as well as trading in possession of inside information during “blackout periods”.
Even worse – the problem is embarrassingly easy to rectify. There is no subjectivity in the disclosure requirements — either a director makes adequate disclosure or they don’t. (It is slightly less clear whether insider trading has occurred, but that can also be fixed by legislating blackout periods). As a suggestion, perhaps legislating that any director who fails to disclose a shareholding within 14 days should be barred from acting as a director for five years. Similarly, if you trade during a blackout period you’ll be barred from acting as a director and perhaps a $250,000 fine. That should fix the problem quick smart. Sounds like something that Australia’s first ever Minister for Corporations Law, Nick Sherry, should be thinking about during his two month vacation. — Adam Schwab
Movers and shakers on the move. According to Saturday’s Sydney Morning Herald’s property pages, Everest Babcock and Brown investor Steven Eckowitz has sold his home in Sydney’s expensive eastern suburbs for $20 million. He is the father-in-law of Everest Babcock and Brown CEO, Jeremy Reid, according to a filing with the ASX in March of 2007. Eckowitz featured in the “departures” section of the BRW Rich List’s 25th anniversary edition this year. The buyer was a South African businessman, Peter Spryrides, and his wife. According to reports last year Mr Eckowitz and Mr Reid and their families owned around 40% of Everest Brown and Babcock, which is a sort of hedge fund.
Meanwhile expansion is the word for the head honcho at PBL Media, Adrian McKenzie. He and his wife have just paid $5 million for a farm and 40 hectares at trendy Berrima in the Southern Highlands, south of Sydney. McKenzie runs the Asia Pacific business for CVC and there’s clearly still a lot of money in it, which makes a nonsense of the Australian’s splash today on the broking report into PBL Media and Consolidated Media Holdings.
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“A June broker’s report by ABN AMRO media analyst Fraser McLeish contains the zero valuation. The analyst also reduces his earnings forecasts for PBL Media to “reflect industry feedback that the television advertising market has weakened significantly in the last few weeks … PBL Media is 75 per cent-owned by private equity firm CVC Asia-Pacific and 25 per cent-owned by James Packer’s Consolidated Media Holdings.”
Clearly by the size of the Berrima purchase, there’s value in PBL Media, otherwise the owners of CVC wouldn’t be paying Mc McKenzie the sort of money to finance that and a house in the Eastern Suburbs. He is settling into the Sydney eastern Suburbs lifestyle nicely. Next a weekender on the Northern Beaches at Palmie? — Glenn Dyer
Gloom in June. Unless there is a powerful recovery tonight, Wall Street is about to record its worst June since 1930. The Dow Jones Average closed on May 31 at 12,638.2 and last Friday at 11346.5, a fall of just over 10 per cent. This is not the Great Crash all over again, although we may be seeing the Great Housing and Credit Crash. But gloom has returned to the markets and the brief optimism of March and April has evaporated. The March lows are likely to be breached, if not today then in early July. A bounce will follow, as it usually does, but the great risk now overhanging the market is of more credit write-offs and defaults. — Alan Kohler, Business Spectator
$699 for a TiVo — tell ’em they’re dreaming. After a long wait, Seven will introduce the TiVo digital video recorder product in July. The Financial Review noted that “Seven will sell TiVo for $699, with no monthly subscription fees. It is expected to offer free software upgrades for the first three years.” The TiVo is a great product and was revolutionary when it was introduced in the US in 1999, almost ten years ago. The problem for Seven is that Foxtel’s IQ digital recorded has virtually all the functions of TiVo, and at $10 per month, is a lot cheaper than Seven’s product. Further, early-adopters who would be likely to purchase a TiVo product would already own a hard-drive recording device which has the same functionally as TiVo, but costs less. For example, you can pick up a set-top box/recorder for less than $400 which has access to electronic guides, and a similar price will get you a unit DVD burning capabilities. TiVo also won’t have access to Pay-TV channels, which won’t help its mass-market appeal. Our prediction – TiVo is a great product arriving 10 years too late, and will bomb faster that Heaven’s Gate. — Adam Schwab