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Share predators face crackdown -

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PETER CAVE: The Federal Government has announced a long awaited crackdown on the shady business of
unsolicited and predatory share offers.

The proposed regulatory reforms target predatory traders such as David Tweed who has made millions
of dollars from making below market offers to vulnerable shareholders.

Under the changes, unsolicited offers would have to have a cooling off period and a warning to
investors who are induced to sell at a bargain price.

But while life will become a little tougher for those predatory traders, they won't be put out of
business.

Here's our business editor Peter Ryan.

PETER RYAN: Predatory share trading has been a booming business in recent years but especially now
with many share prices under pressure.

The targets are often unsophisticated and vulnerable investors who receive unsolicited offers to
buy their shares below the current market price.

The predators or vultures as their often known have been operating within the letter of the law -
but not for much longer.

NICK SHERRY: This abuse has been going on now for at least 10 years and it's time to close off this
exploitation and unfair behaviour.

PETER RYAN: The Minister for Corporate Law Senator Nick Sherry has called for public consultation
on measures to crack down on high profile predators such as David Tweed.

The key proposals include a proper purpose test for access to a company's share register and a
cooling off period of between one and two months so shareholders have the option of withdrawing
their acceptances.

Senator Sherry also wants other measures to protect companies and shareholders from unsolicited
offers.

NICK SHERRY: Issuing a warning statement, health warnings such as appear on cigarette packets and
allowing companies a pre-emptive right to purchase these shares where they are made below the
market value of the shares.

PETER RYAN: So do you think this is going to rub out or eliminate some of the better known
predatory share traders such as David Tweed?

NICK SHERRY: Well without going to individuals who have been engaging in this practice, I certainly
believe when the reforms are finalised and adopted we will see a very, very significantly lower
level of this predatory behaviour against unsuspecting Australians.

PETER RYAN: David Tweed, through his Direct Share Purchasing Corporation, has targeted the share
registerers of some big corporate names such as AXA, Rio Tinto, IAG and Suncorp just to name a few.

He's also focused on investors from lesser known companies such as the boutique fund manager Clime
Asset Management where I pressed him on his predatory practices at an extraordinary general meeting
in November 2005.

PETER RYAN: Do you think that you are an ethical businessman?

(laughter)

DAVID TWEED: Maybe you should ask the Federal Court that one.

PETER RYAN: No seriously. Do you think that your practices are ethical?

DAVID TWEED: Well, I am here today on Clime Capital and you know, we're not giving free interviews
here.

PETER RYAN: Would you accept that perhaps your behaviour doesn't represent the best of business or
ethics?

DAVID TWEED: That's for others to decide.

PETER RYAN: But what do you think? What do you think about yourself?

DAVID TWEED: Doesn't matter what I think.

PETER RYAN: But do you expect that you have exploited people who are vulnerable and don't have the
knowledge of the market that you have?

DAVID TWEED: Do I believe Clime Capital shareholders have been exploited? I don't know about that.

PETER RYAN: Clime's founder Roger Montgomery has been fighting to toughen up laws on predatory
traders since David Tweed's actions.

ROGER MONTGOMERY: It was expensive. It was time consuming. It was distracting and it was
extraordinarily stressful for shareholders and for the board.

PETER RYAN: But Roger Montgomery says the proposals announced today are too weak and overly
complicated.

ROGER MONTGOMERY: What it's not doing is preventing them from happening in the first place. It is
offering a cooling off period so you can get out of the contract but it's not saying we're going to
prevent this from occurring. It's just saying these are the bells and whistles or these are the
hurdles that an offer needs to jump over in order to be able to be made to shareholders.

I am almost certain that the vast majority of shareholders would prefer not to receive these offers
at all.

PETER RYAN: So you are not confident at all that these measures will do anything to rub out
predatory share traders like David Tweed?

ROGER MONTGOMERY: Well, by their very nature, by definition they are saying the offers can still be
made but they need to jump these hurdles. They need to have these bells and whistles attached.

PETER RYAN: Senator Sherry agrees the reforms won't put predatory traders out of business but he
says the new warnings and tougher guidelines will make life a whole lot tougher.

NICK SHERRY: I am confident that when we have concluded the overhaul of regulation, we will
certainly have very, very small amount of abuse. Much small than has been occurring at the moment
and what we have seen in recent times.

PETER CAVE: The Minister for Corporate Law Senator Nick Sherry ending that report from our business
editor Peter Ryan.