Alert on 'window dressing'

Pushing up the value of portfolios can often inflate management fees for fund managers.

The Australian Securities and Investments Commission yesterday sent a notice to stockbrokers across the country saying window dressing was a form of market manipulation and offenders could be hit with a fine of up to $1 million.

Typical window dressing orders include a series of small share trades that have the effect of pushing up a share price. Rapid orders placed near the end of the day or fund managers placing orders that were out of step from their usual pattern of trading were also warning signs, ASIC said.

"The ASIC market surveillance unit is also paying particular attention to trading around the end of the financial year and will refer instances of possible window dressing for investigation where this is appropriate," said Jonathan Coultas, of ASIC's market surveillance unit.

ASIC last year took over the role of full market supervision from the Australian Securities Exchange.

Although there is no consensus about how much window dressing there is at the end of the financial year, its existence underscores the lack of disclosure by fund managers. In contrast to other countries, in Australia there is no requirement for fund managers to disclose on a regular basis the holdings of stocks and shares in their fund.