Opes Prime creditors who still believe they are only going to get 30c in the dollar should buy The AFR today because it will cheer them up no end.
Reporter Matthew Drummond produced a cracking feature which laid bare how pathetic ASIC and the ASX were as Opes spiralled out of control over the previous few months. The killer paragraph was as follows:
An investigation by The AFR has uncovered internal Opes Prime documents in which staff recorded discussions with regulators. The documents reveal that the stockbroking firm felt “encouraged” by senior ASX market supervision staff to exploit a loophole in the rules by hiving off its $1.3 billion worth of bank debts into a company that did not need an Australian Financial Services licence and was therefore out of the regulators’ sights.
There was a whole lot more detail which leads to the obvious conclusion that the ASX is going to be sued by creditors and ASIC was also incredibly slack.
ASX shares have almost halved so far this year and today they slumped another 90c to $34.10. I reckon they are still a screaming sell because Australia’s most lucrative monopoly has buckleys chance of retaining its regulatory role, faces new competition and will get sued over Opes.
The Opes Prime creditors are facing losses of $300-$400 million but there is an emerging flock of deep-pocketed targets to chase down.
For starters, there is more than $100 million in the ASX-controlled National Guarantee Fund which was set up to plug holes when brokers collapse. Why not be efficient and hand over that cash now?
ANZ, and to a lesser extent Merrill Lynch, is the other obvious targets. Alan Kohler really turned his guns on ANZ in this Inside Business editorial yesterday which he expanded on for Business Spectator today.
ANZ is copping such a reputational shellacking that it is now trading at a large discount to its Big Four rivals. The stock slumped another 3% in morning as its market cap tumbled below $40 billion – perilously close to a three year low.
The ANZ board needs to make a quick decision to stop the bleeding. With four staff on gardening leave and emerging tales of its lenders having their own accounts with Opes, it will clearly be called upon to make good on some of the losses.
If the bank made a one-off $200 million contribution to the creditors pool – conditional on creditors agreeing to waive all future legal action, it would be a very worthwhile investment.
Under this scenario, ANZ would effectively step up and represent the creditors in pursuing recovery claims against various other parties including the Opes Prime directors and senior management, the auditors, the ASX and the various favoured clients who weren’t margin called.
The alternative is years of litigation, enormous brand damage, huge distractions for management and a much bigger final bill.
Go here for Chris Murphy’s claims of malice against Stephen Mayne’s Opes coverage.
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