MIU - Issue 144 - December 2022
Former Tesla Australia director pleads guilty to insider trading
Former Tesla Motors Australia Pty Ltd (Tesla Australia) director Kurt Schlosser has pleaded guilty to two counts of insider trading.
On 16 September 2020, Mr Schlosser acquired 86,478 shares in the mining company Piedmont Lithium Limited (Piedmont) after being informed, in his role as country director of Tesla Australia, of inside information regarding an in-principle agreement that Tesla Australia’s ultimate holding company, Tesla Inc, had reached with Piedmont for the supply of lithium.
After information about the agreement became public and Piedmont’s share price rose, Mr Schlosser sold his Piedmont shares for a net profit of $28,883.53.
Mr Schlosser also communicated the inside information about the Piedmont/Tesla Inc in-principle agreement to a friend on 16 September 2020, knowing that his friend would be likely to acquire Piedmont shares.
Mr Schlosser pleaded guilty on 15 November 2022 to one count of trading while in possession of inside information and one count of communicating inside information to an associate in breach of section 1043A of the Corporations Act 2001 (Corporations Act).
At the time of the offending each breach of section 1043A of the Corporations Act carried a maximum penalty of 15 years imprisonment.
- Read the media release
Further regulatory response regarding the ASX CHESS replacement program
ASIC and the Reserve Bank of Australia (RBA) (the regulators) have taken further action to ensure that ASX takes all necessary steps to support and maintain the current Clearing House Electronic Subregister System (CHESS) until its replacement is successfully implemented.
ASIC has issued notices to ASX Clear Pty Ltd (ASX Clear) and ASX Settlement Pty Ltd (ASX Settlement) under section 823B of the Corporations Act. These notices require ASX to produce a special report on specified matters in relation to the current CHESS. The detailed list of matters to be addressed in the special report are set out in the section 823B notices. The special report will be audited by Ernst & Young. ASIC will take a practical approach to the publication of the findings of the special report and the audit report, taking into account any confidential commercial and security information, given that CHESS is critical national infrastructure.
This is the first time ASIC has used this delegated power against an operator of licensed market infrastructure for the purposes of auditing the support and maintenance of a clearing and settlement (CS) system.
The RBA, following a determination made by the Payments System Board, issued a letter of expectations to the boards of ASX Limited, ASX Clear and ASX Settlement about the current CHESS and its replacement. This supplements the joint letter of expectations the regulators issued to the boards of ASX Limited, ASX Clear and ASX Settlement on 17 November 2022.
The regulators will continue to consider the need for further regulatory responses to ASX's announcement on 17 November 2022 that they have decided to pause the CHESS replacement program. The regulators are prepared to use a range of regulatory options to ensure that ASX Clear and ASX Settlement adhere to the regulators’ expectations and comply with their CS facility licence obligations.
The regulators' coordinated action demonstrates their shared immediate concern that the current CHESS is supported and maintained to ensure its stability, resilience and longevity so that it can continue to service the market reliably. The regulators will continue to work closely together to monitor ASX’s compliance with its CS facility licence obligations, including the additional licence conditions imposed in November 2021, as well as ASX’s observance against the relevant Financial Stability Standards – and take action if required.
- Read the media release
New market integrity rules – Will you be ready?
Following recent discussions with market participants, we’re concerned that some aren’t sufficiently prepared for the commencement of new market integrity rules on 10 March 2023.
In March 2022, we announced new market integrity rules aimed at promoting the technological and operational resilience of securities and futures market operators and participants.
With less than three months of the transition period remaining, we expect participants to have already completed a detailed gap analysis and be advanced in (or have completed) their preparations.
Information to assist participants is available in:
- Regulatory Guide 265 Guidance on ASIC market integrity rules for participants of securities markets
- Regulatory Guide 266 Guidance on ASIC market integrity rules for participants of futures markets.
Send any questions to your Intermediary Supervisor or by email to Market.Participants@asic.gov.au.
On the lookout for EOCY ‘window dressing’
As we near the end of the calendar year (EOCY), we’d like to remind you to be on the lookout for any unusual trading that may affect share price valuations and EOCY performance figures. This activity is known as 'window dressing'.
Window dressing is a form of market manipulation by parties who have a financial incentive to influence share prices around key reporting dates. These parties include directors, large shareholders and fund managers who periodically report to clients about investment performance.
We encourage you to take active steps to identify possible misconduct through system controls and pre-trade filters, as well as through post-trade reviews of any abnormal trading behaviour. You must notify ASIC if you identify or suspect ‘window dressing’. This can be done through the ASIC Regulatory Portal or by email to firstname.lastname@example.org.
We’ll continue to monitor unusual price movements that may indicate market manipulation. If we identify any trading that we believe should have been reported to ASIC, but wasn’t, we’ll contact you for an explanation.
See Regulatory Guide 265 Guidance on ASIC market integrity rules for participants of securities markets and Regulatory Guide 266 Guidance on ASIC market integrity rules for participants of futures markets for more information about SARs.