Securities: ASIC warns on bank shares offer

The Australian Securities and Investments Commission (ASIC) today alerted shareholders of the Bendigo Bank Ltd about offers for their shares made by Share Buyback Group Pty Ltd, of which Suzanne Lee Forster is the sole director and shareholder. The offers were made in March and April this year.‘The offer is for AUD10 per share, dramatically below what shareholders would receive for their shares on the stockmarket. As the current share price is around AUD16, it’s hard to see why it would be in any shareholder’s interest to accept it’, ASIC’s Executive Director, Consumer Protection, Mr Greg Tanzer said.‘ASIC shares Bendigo Bank’s concern that some of its older shareholders and shareholders with possibly less market experience may accept this offer even if it’s not in their best interests.’‘The Bendigo Bank has told ASIC that the average age of its shareholders is over retirement age, so there would be a large proportion of elderly shareholders who may be more easily taken advantage of’, Mr Tanzer said.In addition, the Bendigo Bank has many shareholders with relatively small holdings. Many shareholders have held their shares in the company for a long time, such as about 40 per cent of shareholders who have held their shares for 10 years or more. Mr Tanzer said these shareholders may be less experienced in share trading and possibly not so up-to-date with current share prices.‘While accepting a low-ball offer for shares is ill-advised, it is not illegal. ASIC continues to work to educate the community about these activities and encourages people to seek professional advice and information to better protect themselves.’‘If you own shares, first of all consider if it’s right for you to sell at all. If you do want to sell, and take advantage of the current market price, you can open an account with a stockbroker or you could sell your shares, without a regular account, through a discount broker for around AUD50’, Mr Tanzer said.Although it is not against the law to make an unsolicited offer to buy someone’s shares, it is illegal to mislead or deceive shareholders into accepting an offer. The offer must also comply with strict legal requirements, including the prohibition against misleading or deceptive or unconscionable conduct.In April 2003, the Federal Government introduced regulations governing these types of offmarket offers to provide consumers with more protection. Under the regulations a person who makes an unsolicited offer to buy shares off market for a certain price must provide:• a written statement setting out the market value of those shares on the day the offer ismade; and• a minimum of one month in which to accept the offer.