ASIC has accepted a court enforceable undertaking from Goldman Sachs Australia Pty Ltd (GS Australia) to improve controls relating to bookbuild messaging in certain equity capital market transactions lead managed by GS Australia. A bookbuild is the process of generating, recording and capturing demand from potential investors for a capital raising transaction.
Following an investigation into a block trade transaction undertaken by GS Australia in relation to shares in Healthscope Limited on 23 November 2015, ASIC had concerns about certain representations made by GS Australia to potential investors about the minimum fixed demand.
GS Australia has implemented changes to its controls and processes including to require:
- legal or compliance approval of all bookbuild messages to be provided to potential investors in certain equity capital market transactions; and
- compliance attendance at any sales calls at the launch of certain equity capital market transactions to provide oversight of messaging to potential investors.
Under the enforceable undertaking, GS Australia will conduct an internal review of policies, procedures, systems, controls, training, guidance and the monitoring and supervision of employees engaged in equity capital market transactions lead managed by GS Australia and which involve a bookbuild or underwriting process, and implement changes to address any deficiencies identified.
Following those changes, GS Australia will provide an attestation from a senior executive to ASIC that the controls are adequate and appropriate to address ASICs concerns.
GS Australia will also make a community benefit payment of $500,000.
ASIC Commissioner Cathie Armour said “This court enforceable undertaking reinforces our focus on intermediary conduct and standards in capital raising transactions. Investors need to have confidence that they are being provided with accurate information in the course of a bookbuild or underwriting process.”
GS Australia offered and ASIC agreed to accept this undertaking as an alternative to pursuing civil or administrative action. Under s93AA of the ASIC Act, if a court is satisfied a person has breached a term of an undertaking, ASIC can obtain orders from the court to enforce compliance.