Maybe not Archegos related, but it’s worth noting the heightened attention to related areas of shareholding disclosures.
Recently, the the Australian Securities and Investments Commission (ASIC) just published an update on activist short selling campaigns which involves taking a short position and then publicising it through media interviews, social media posts, agent or otherwise providing detailed accounts of concerns with the target entity to negatively impact the price (using a “short report“).
Perhaps, the best example of this was investor George Soros’ 1992 bet against the British Pound, which in his opinion, was overvalued against Germany’s Deutsche Mark, and were being propped up by central banks, like the Bank of England.
ASIC’s ask of short sellers to check key facts with the target entity makes sense for both parties and should increase the credibility of the short report. ASIC’s suggestion also requires short sellers to tone down the emotive and inflammatory language.
ASIC itself says its research indicates “activist short selling campaigns tend to target entities with complex and opaque corporate structures and accounting practices, or poor disclosure”. So short selling can help discourage such practices and that is a good thing. Nevertheless, for every good thing, safeguards to prevent market abuse are still needed.
Artius Global believes the move towards greater transparency in the market is a trend that will continue. The key is that regulators want an informed market and will demand certain obligations to avoid a conflict of interest.
Perhaps the best example of this was investor George Soros’ 1992 bet against the British Pound which in his opinion, was overvalued against Germany’s Deutsche Mark and were being propped up by central banks like the Bank of England.