ASIC has completed its enquiries in relation to the circumstances of research published by UBS Securities Australia Ltd (UBS Securities) regarding Newcrest Mining Limited on 5 June 2013 and regarding the privatisation of NSW electricity infrastructure on 17 March 2015.  Following those enquires and in view of the remediation which UBS has undertaken, ASIC has determined to take no further action.

ASIC was concerned that UBS Securities’ control framework relating to its research function, and its compliance with that framework, at the relevant times was not adequate for an investment bank of UBS’s size and complexity. UBS Securities has acknowledged these concerns. 

ASIC notes that in response to ASIC's enquiries UBS Securities is undertaking the following remedial steps to improve its control framework relating to its research function. These include the following changes in structure, policies, procedures and training:

• the appointment of additional supervisory roles in UBS Securities' Research department including a dedicated Head of Research, a Deputy Head of Research and a Research Product Manager, all of whom are physically segregated from other UBS divisions;
• the appointment of an additional Supervisory Analyst resource  for Australia and the appointment of an additional compliance resource to increase UBS Securities' compliance coverage of research;
• the establishment of a Research Executive Committee comprising Head of Research, Deputy Head of Research, Research Product Manager and Research Business Manager with responsibility for overseeing the production process for investment research and the research pipeline;
• ensuring that all relevant UBS group staff undertake training focused on information barriers as part of the broader UBS compliance training programme;
• the publication of guidance to and additional training of research analysts on identifying and handling sensitive information received from issuers;
• a requirement that all research analysts certify when submitting draft research for approval by UBS Securities' Investment Review Committee (IRC) whether they are in possession of any information that could be considered material and not public;
• the implementation of procedures for logging and reporting by research analysts of issuer initiated interactions and monitoring of compliance with these procedures;
• the implementation of policies prohibiting email and chat communications between the Research department and persons external to the Research department that contain research analyst opinions, analysis, views and colour that differ from published research, and increased monitoring of Research department electronic communications; and
• the provision of training to IRC members on the risks of selective disclosure of sensitive information by issuers informing material changes to research price targets, ratings and views.

Additionally, UBS Securities has appointed an independent expert to review the implementation of the remedial measures outlined above and to certify to ASIC on a quarterly basis for the first 12 months and then on a six monthly basis for the following 2 years that the measures have been implemented and maintained.

Should ASIC determine that any of these changes have not been fully implemented or maintained, it would be open to ASIC to take appropriate action, including enforcement action where warranted.

ASIC is currently undertaking a review of investment research practices, and will update its regulatory guidance regarding its expectations of research  houses in respect of the handing of confidential information and the management of conflicts in due course.