ASIC to investigate Future Fund's Telstra sell-down

James Riley
Monday, 26 October 2009 16:52

IT Policy - Government Tech Policy

The Senate has called on the market regulator to investigate whether the Future Fund was tipped off about impending regulatory changes in the communications sector just weeks before offloading huge numbers of Telstra shares.

Family First Senator Steve Fielding successfully moved the motion calling for the Australian Securities and Investments Commission (ASIC) to provide the Senate with a report on the Future Fund share sale.

The Future Fund sold 34 per cent of its multi-billion dollar Telstra holding on August 20 at $3.47, just weeks before Communications Minister Stephen Conroy announced plans for sweeping changes to market regulation on September 15, including the planned functional separation of Telstra.

The Conroy announcement sent Telstra shares plunging from a September opening of $3.25 to $3.11, prompting the Australian Shareholders Association to wonder out loud about the timing of the Future Funds sell-down

"Why did the Future Fund decide to sell a huge chunk of its stake in Telstra only three and a half weeks before the Rudd Government made its announcement to break up Telstra?" Senator Fielding said.

"Now I don’t know if the Future Fund had any unfair advance notice or not, but there are certainly quite a few people out there who are sceptical."

Senator Fielding said an inquiry into the sell-down was fair to ensure that there was "no funny business involved."

At the time, Finance Minister Lindsay Tanner had rejected any suggestion that the Future Fund could in any way have had advance notice of the planned changed to regulation, pointing out that it had flagged long ago its plans to sell down its disproportionately large Telstra holding.

The Senate motion is passed, but it is up to the Government now whether it directs ASIC to act on the motion.