A senior equity capital markets banker, who declined to be named, said the more equitable option for Macquarie on the BrisConnections float would have been to lower the share price or postpone the IPO. “There is a fair bit of grey in broker firm allocations,” he said. “But if you are having to take stock back, you should reprice the transaction or pull it.
Responding to the claims, a Macquarie spokeswoman said float processes remained fluid until clients were allocated and had paid for stock. “In an IPO, the position of clients with respect to allocation of stock remains fluid until allocation of stock to the broker is firm, and clients make a legally binding commitment and pay for the stock,” a Macquarie spokeswoman said. “Therefore the position of each client may be different.
Macquarie Group has urged any aggrieved clients who lost money in the initial public offering of the BrisConnections toll road in 2008 to raise their concerns following claims it allowed a select group of wealthy customers to pull out of the disastrous float.
The undertaking identified compliance failures and lapses in record keeping, risk management and employee training dating as far back as 2008. ASIC’s statement noted that Macquarie would contact clients dating back to 2004. While ASIC declined to comment on the BrisConnections accusations this week, Macquarie’s conduct around the float is not thought to have been assessed as part of the company’s enforceable undertaking.
Another Macquarie insider said, “The bottom line is BrisConnections is one of the dirtiest secrets that Macquarie hopes never sees the light of day. “Some clients had not agreed to anything but were force fed it as their adviser was not one of the chosen few allowed to hand stock back.
The decision to allow selected private client advisers to hand back stock created animosity between the wealth unit and Macquarie’s capital markets division that was working to ensure the float was a success. “Some thought the brokers should wear it.
Sources said advisers - who are typically paid on commission - who returned BrisConnections stock to Macquarie had to pay the bank a fee equal to 10 per cent of the value of those shares. “Some did that in 12 months.
The firm is seeking to fix a string of compliance deficiencies and lax record keeping. “They knew it [the IPO] was going to tank,” another Macquarie insider said of the BrisConnections float. “The changes since the EU are lipservice and the culture has stayed the same. “If you were a small client or small business writer, you were left with stock.
All clients should be treated the same,” managing director of Sirius Fund Management Kieran Kelly said. “There’s always been an underlying compromise with having a wealth management area and stockbroking arm tied to an investment bank and I don’t know how you remove that conflict of interest.
The investment bank allowed some wealthy customers to pull out of the BrisConnections initial public offering in 2008 when it looked like the float was going to tank, according to seven current and former Macquarie staff.
Senior executives at Macquarie Private Wealth came up with the plan to allow some clients to opt out and picked which advisers could participate, the sources said.
Read more here: SMH