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Investor protection at risk: Moore



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JOHN MOORE MP SHADOW MINISTER FOR

/ COMMONW EALTH PARLIAMENTARY LIBRARY c. I. s.

BUSINESS and CONSUMER AFFAIRS INVESTOR PROTECTION AT RISK : MOORE

The relaxation of rules relating to prospectuses will not provide appropriate investor protection, according to John Moore Shadow Minister for Business and Consumer Affairs.

"The Australian Securities Commission legislation which seeks to abolish the need for registration and the pre-vetting of prospectuses will put smaller investors and innocent professional advisors at greater risk.

"Self enforcement carries serious risks. Professionals who prepare prospectuses - accountants, lawyers, engineers and geologists - will be subject to greater liability.

"The legislation contains a catch-all clause similar to Section 52 of the Trade Practices Act providing remedy for aggrieved investors due to misleading or deceptive statements in a prospectus.

"The range of remedies available to investors has been broadened - empowering them to take action against not only directors, but also underwriters, sponsoring brokers, and professional advisors.

"This in itself is an admission that the abolition of pre-vetting will be highly contested and unworkable.

"There are no official guidlines or definitions, only a general requirement that prospectuses contain a "fair and accurate presentation of all material information relevant to a decision by an investor.

"Equity raisings by companies should be monitored sensibly by our corporate watchdog with as little reference to the court room as possible

"In a flat market where investors are wary of new stock raisings, the relaxed rules may be acceptable. In today's volatile marketplace, another bull run may well expose the inadequacies and recklessness of

relaxing prospectus guidelines.

21 JUNE, 1988

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