ORDERS have been issued in the Supreme Court of Western Australia formally concluding all matters relating to the Australian Securities and Investments Commission’s proceedings against Oretek Ltd.
The settlement – between ASIC and Oretek and its directors Dr William Harold Jay, Dr John Richard George Andrews and Ivo Sulenta and company secretary Robert Samuel Allen – was also approved by shareholders at an extraordinary general meeting and was concluded without any admission of liability on the part of Oretek or its officers.
Oretek, based in New South Wales, provides environmental solutions to the mining and industrial manufacturing industries, with a particular focus on remediating degraded soils and waterways and preventing copper cyanide being discharged from tailings dams.
ASIC began proceedings against Oretek and its officers in 2002, alleging they breached fundraising provisions of the Corporations Law of Western Australia and the Corporations Act during the period of April 2000 to December 31 2001.
ASIC’s action was based on concerns that Oretek had issued and processed transfer applications for shares that were on-sold within 12 months without providing a disclosure document to investors or lodging a disclosure document with ASIC.
After the commencement of these proceedings Oretek lodged a prospectus in a form that complied with the Corporations Act and took steps to address ASIC’s other concerns.
Clear document call
FINANCIAL services industry participants have been told to keep their disclosure documents clear, concise and effective or they will have to talk to the regulator.
Australian Securities and Investments Commission executive director of financial services Ian Johnston said some industry participants were saying their lawyers were telling them to produce statements of advice (SOA) running to 80 or 90 pages in order to comply with new financial services regulations.
"This is not what we would expect to see under the law and it is not helpful to consumers," he said.
"ASIC sees disclosure under the law as a consumer-centric regime focusing on the consumer’s information needs.
"In ASIC’s view the law is clear about what needs to be contained in such documents. However, if product issuers and advisers believe they need to produce overly complex documents in order to comply with the law, ASIC is prepared to consult with them and issue further guidance."
ASIC understands that many financial service providers will take a conservative course and produce documents that are "boiler-plate".
ASIC has asked the Financial Planning Association to provide it with examples of SOAs that it considers to be overly long and complex.
"However, we are also aware of examples that are in a shorter form and which correctly balance the disclosure of all information the client needs with the requirements for the information to be presented in a clear, concise and effective manner," Mr Johnston said.
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