/Baillieu stockbroker may have promised favourable IPO allocations

Baillieu stockbroker may have promised favourable IPO allocations

“Yeah, I’m hungry,” Stephen Macaw allegedly replies. “I wanna make a lot of money in the next five years.”

Brothers and IPOs

Stephen Macaw tells the mystery investor that he or she should work through his brother – whose relationship with the firm is unclear – to obtain shares in initial public offerings that are likely to surge after going public.

“He’s the adviser who’s got a client, which is your money,” Stephen Macaw allegedly says. “That client puts money into our deals and then … they list on the stock exchange. We take money out and money falls back.

“No one can never link that to you in the Australian market. You’re sitting in New Zealand, or an entity, and you put dollars into that client. That becomes a client of Baillieu’s. The adviser of that client’s Scott.”

Anonymous emails allegedly contain recordings of separate conversations with a potential investor and Ballieu’s head of corporate finance, Stephen Macaw, pictured, and his brother, Scott Macaw, describing how the firm structures clients’ investments and conducts share sales. 

Unlike Australia, New Zealand doesn’t have a capital gains tax.

A spokesman for the firm said Scott Macaw “is not and has never been an employee of EL&C Baillieu”.

“EL&C Baillieu can’t be held responsible for what Scott might say on his on own behalf,” the spokesman said.

Know your customer

In the latest recording, which was sent to Ms Dawson on Sunday, Scott Macaw appears to assure the potential client they will not have to declare information required under the “know your customer” procedures.

“Towards Baillieus and Steve, there will be no KYC issues because the structure will be 100 per cent combined and we’re gonna divide values with absolutely everything about that entity and the paperwork, blah, blah, blah,” a man identified as Scott Macaw is recorded saying.

“Do Baillieus need to know that this is … exist?” another man asks.

“No,” Mr Macaw allegedly replies.

There was no response from the email address that is the source of the recordings, which uses the name of a corrupt former US stockbroker, Stratton Oakmont, featured in The Wolf of Wall Street. A Twitter account using the handle @strattonoakmo13 has posted two of the recordings, which sound like they were made in a restaurant or cafe.

AUSTRAC, the financial intelligence agency, states the know-your-customer system “makes you aware of any unusual or suspicious activity and reduces the risk of your business or organisation being exploited”.

KYC declarations can contain 20 pages of detailed information about individuals’ financial affairs, including where they live, every trust they own and all beneficiaries, and their debts.

‘The best deals’

In a separate conversation with Stephen Macaw that was sent to Ms Dawson on Saturday, the stockbroking executive appears to promise favourable IPO allocations if the transaction is conducted through his brother.

“Effectively, we would be giving you first look of the best deals,” a man identified as Stephen Macaw says on the recording. “And the reason that’s good for me is, if Scott is involved with you, then I get some benefit there.”

The other person replies: “You make money twice: once on the commission which goes into Baillieu, and whatever is on the side.”

“I get some return so that you guys start getting the best allocations of the best stuff,” Mr Macaw allegedly replies.

“Tax wise?” the other person says.

“That’s my wife,” Mr Macaw allegedly replies, after a pause. “A bit of it comes my way.”

A spokesman for EL&C Baillieu said the conversation was over breakfast and Mrs Macaw was sitting on an adjacent table with their children.

A woman identified as Megan Macaw on her Facebook page. 

Corporate records show Mr Macaw and his wife, Megan, have jointly invested in companies that have raised money through EL&C Baillieu.

In 2014 the couple were issued 8.7 million shares in Bioprospect, which was developing a promising test for mental illness, at 0.3¢ a share. The company then changed its name and the shares rose to 0.42¢.

Conflict of interest?

Stephen Macaw’s latest transaction was the sale three weeks ago of $15 million of shares in 4DX, a medical software company preparing for a sharemarket listing.

Asked in the recorded conversation if there could be a conflict of interest in how the shares are allocated, the man identified as Stephen Macaw concedes there is.

“Well there can be, yeah,” the person says. “When I spoke to Scott about this … anything that he takes in positioning, I don’t wanna know about it. I trust him that the economics can flow back later.”

Stephen and Scott Macaw haven’t responded and couldn’t be reached on Monday. The existence of the recordings was first revealed in The Australian Financial Review‘s Street Talk column a week ago.

“Every deal we do, it’s a really good deal,” Stephen Macaw allegedly says in a recorded conversation sent on Friday to Ms Dawson, a former Deloitte accountant who has been chairman for two months. “If it’s $10, we might take five, but on the other five we’ll still spread it out.

“So that’s … is a $50 million pre-IPO, we might need … put 20 or 25 million in, and you know, in 12 months you turn that 20 into 35. You know, 30 to 35. So we’ll make very good money. It will be part of the bigger picture.”

“No one will ask anything?” the would-be investor says.

“No one will ask anything” Mr Macaw allegedly replies.

“And how would you divide the – your part between you?”

“It’s up to him. Shake hands.”

“I don’t want any problems in the sense that this is – this does not exist.”

“It’s yeah, absolutely.”

“This exists, this exists naturally. That’s the beautiful part here.”

“Yeah.”

“You’re brothers. You speak on a daily basis. You’re good friends. This does not exist.”

“Correct.”