KUALA LUMPUR, June 29 ― The Australian Securities and Investments Commission (ASIC) said it will review recent trading of retirement village operator Aveo's shares amid claims of improprieties in the company's planned buyback of its stocks.
Sydney Morning Herald (SMH) reported that the trade regulator would look for irregularities in the on-market purchases of shares by Mulpha International, a company associated with Malaysian billionaire and Aveo chairman Lee Seng Huang. Mulpha is Aveo's biggest shareholder.
“ASIC will always examine trading, particularly directors' trading, before, during a significant or material event or announcement,” a spokesman from ASIC was quoted saying.
Aveo announced on Tuesday a buyback of 9 per cent of its stock, after its share price plunged amid claims of elder fraud.
Australian paper The Age reported that the buyback helped curb the losses in the company’s share price on the same day, with the stock dropping more than 5 per cent before recovering to trade 1.5 per cent lower at AU$2.67 (RM8.72) later on.
The fall followed an 11.5-per cent drop in the company’s share price Tuesday after the release of a joint investigation by Australian news outlets Fairfax Media and ABC’s Four Corners into Aveo’s allegedly questionable business practices, including misleading marketing and advertising and property sales, as well as safety issues.
The buyback announcement triggered immediate calls by “investment specialists” for regulators to scrutinise Aveo's shares trading, SMH reported.
One of them, investment watchdog Ownership Matters, said the authorities and ASIC should look for any signs of insider trading prior to the retirement operator's planned buyback announcement.
“Trading before the buyback was announced is certainly worthy of a raised eyebrow from ASIC and further investigation,” the group's chief executive Dean Paatsch was quoted saying.
Under Australian companies law, directors are not allowed to trade while in receipt of inside information. Buybacks are commonly used to reward shareholders and put a base under a company's share price if it is falling.
The buyback was reportedly described by stockbrokers as the reaction of a company under siege and purportedly showed that Aveo put shareholders first, according to The Age.
Australian politicians have reportedly urged the Australian government to review the country’s retirement village sector amid the scandal surrounding Aveo, one of the biggest retirement village operators in Australia accused of charging high exit fees and turning over residents for profit.
