Director margin loans under scrutiny

Investors want greater disclosure margin loans held by directors against shares in their companies and the federal Minister for Corporate Law, Nick Sherry, has asked Australian Securities and Investments Commission for a briefing on potential weaknesses in the regulation of the sharemarket. Some fund managers have called for full disclosure of margin loans on director's shareholdings to address concerns that hedge funds could target companies whose directors have borrowed to purchase significant shareholdings. The directors of both ABC Learning and Allco Finance Group have been forced to sell shares to meet margin calls after shares in their companies fell sharply. The ASX’s chief supervision officer, Eric Mayne, said that there have been suggestions that people could be using these sorts of arrangements to drive stock prices down and force a sale.

Source: The Australian Financial Review

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