Markets watchdog hopes for more bite

Last updated 05:00 21/09/2012

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The Financial Markets Authority says it cannot do any more to stop low-ball share offers under current rules, but moves are under way that could give it more bite.

The watchdog is responding to criticism from Vector chairman Michael Stiassny, whose company became the latest target of low ball bidder Stock & Share Trading.

The Australian firm has recently been contacting Vector shareholders and offering to buy their shares at $1 apiece, which is about a 65 per cent discount on the trading price at the time of $2.85.

Stiassny said this was the second time Vector had been targeted by low-ball bidders.

“It can't be in any of our interests or the interest of New Zealand Inc to see any shareholder burnt and that's what we have got to focus on,” said Stiassny, particularly as the government looked to tap mum-and-dad investors to get the partial float of the state-owned energy assets over the line.

His comments come after the FMA tightened rules on unsolicited offers in May last year, requiring bidders to carry a warning statement that lists the market value of the security and to recommend they contact an authorised financial adviser before undertaking any sale.

The FMA has published a brochure on unsolicited offers and sent out several warnings to the public cautioning them of the risks involved.

Although it is hard to judge how the warnings have affect investor take-up, they have done little to stem the volume of offers, with firms such as Fletcher Building.

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- BusinessDay.co.nz

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