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BFCSA: ASIC chairman James Shipton is a child of the Melbourne establishment

Posted by on in ROYAL COMMISSION URGENT
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ASIC chairman James Shipton is a child of the

Melbourne establishment

 

Aaron Patrick Senior Correspondent

Updated Oct 17, 2017 — 5.26pm,first published at 9.48am

 

When James Shipton wants to understand what's really going on in corporate Australia, he will be able to pick up the phone and call four men he's known almost 30 years who, like him, have stormed to the top of the finance industry in their 40s.

Shipton, the new chairman of the Australian Securities and Investments Commission, lived as a Melbourne University undergraduate student with Ben Gray and Robin Bishop, who plan to become Australia's most powerful private equity investors, John Knox, the head of Credit Suisse Australia, and Christian Johnston, the head of investment banking at Goldman Sachs Australia.

A child of the Melbourne establishment – he coached rugby at Geelong Grammar and his father was a patrician Liberal MP – Shipton was a resident student at the university's Ormond College in the late 1980s and early 1990s, a period in the college's history that produced many successful investment bankers.

Although investment banking and private equity aren't ASIC preoccupations, their leaders often have inside information that can be useful for any regulator – especially one who has spent most of his career overseas – trying to navigate corporate Australia.

An English path

Shipton's path into finance was more English than Australian. He studied Asian politics, history and economics at Melbourne University, and later completed a law degree at Monash University.

Whereas many of his contemporaries sought to establish their credentials in New York and London, Shipton relocated to Hong Kong after graduating. A wonderful networker with a self-deprecating manner, he flourished in the Asian business environment.

In 10 years he went from a legal assistant at Jardine Matheson, a conglomerate of 430,000 staff, to a managing director at Goldman Sachs, the world's most famous investment bank.

At Goldman Sachs he started in the division that provides services to hedge funds. After three years he became head of government and regulatory affairs, a job that made him responsible for liaising with the Hong Kong Securities and Futures Commission. He then turned from poacher to gamekeeper, becoming a manager at the financial markets regulator reporting to the CEO, which set him up perfectly to run ASIC.

At the SFC, as it is known, Shipton signed on to a three-year contract to oversee "intermediaries", stockbrokers, corporate finance firms, high-speed traders, investment managers, credit agencies and other market specialists. One of his main tasks was to merge its licensing and supervision teams.

Shipton was a resident student at the university's Ormond College in the late 1980s and early 1990s. 

After his term ended, he spent a year as the deputy of an eight-person unit in Harvard University's law school that runs conferences on international financial regulation. The job appears to have been administrative. He wasn't mentioned in an in-house article last year on the unit's 30th anniversary and isn't on the law school's faculty directory.

Liberal pedigree

Shipton's father, Roger Shipton, was a prominent member of the Liberal Party's moderate grouping in Victoria when they were known as small-l Liberals or, less charitably, the wets.

The Shiptons' rambling Melbourne home was built in the 1880s. When James was growing up it still had century-old timber floorboards, 16-foot ceilings, brass beds and wide verandahs.

Roger Shipton was pushed out of Parliament by the wave of economically dry Liberals led by Michael Kroger, Rod and David Kemp and Peter Costello, who in 1990 took Shipton's seat of Higgins, which includes the wealthy suburbs of Toorak and South Yarra. He died eight years later.

Higgins was won in 2009 by Revenue and Financial Services Minister Kelly O'Dwyer, a leader of the Liberal moderates, who remain on the defensive in Victoria. O'Dwyer had carriage of Shipton's appointment, an irony that will be lost on no one in the party.

(Kroger has returned as party president through an alliance with right-wing Christians.)

Shaking up ASIC

The government started planning for the succession for 12 months ago, when it hired US headhunter Heidrick & Struggles to mount a global search to replace ASIC chairman Greg Medcraft.

A small panel of public servants, including competition regulator Rod Sims and Treasury secretary John Fraser, vetted Heidrick & Struggles' shortlist.

"One person was outstanding," says O'Dwyer, who put Shipton's name to the Turnbull cabinet on Monday, which approved him.

(Coincidently, Health Minister Greg Hunt, who represents the seat that includes wealthy beach town of Portsea, lived at Ormond College a few years before Shipton and the investment bankers. And a Heidrick and Struggles Melbourne partner, Adam Badenoch, was at Ormond the same time as Shipton, although wasn't involved in the search.)

O'Dwyer argues Shipton has "unique characteristics" for the position: experience as a lawyer, banker and regulator.

Changing ASIC

There are signs the government wants Shipton to shift ASIC's focus. One of the government's concerns is the revelation last year that ASIC commissioners spent up to 80 per cent of their time managing the organisation rather than speaking to investors, companies and the public.

Overseas, some senior regulators spend half their time dealing with the outside world, a contrast that contributed to perceptions that ASIC was too inwardly focused.

"There was a massive gap between how ASIC saw itself performing and the industry view," O'Dwyer says.

Instead of being given another three-year term, Medcraft was granted an 18-month extension that ends next month.

In a prepared statement, Shipton appeared to allude to the government's wish to shake up ASIC. "All financial institutions globally need to continue their hard work on improving their own organisational dynamics and culture," he said.

Home front

On a personal level, Shipton is a renovation enthusiast. Ten years ago he bought a colonial-era three-storey house on Hong Kong island that contained the first European toilet installed in the village.

One of his problems involved inflexible bureaucracy: almost no banks would grant him a mortgage because there was no occupation certificate for the building, which was built in 1906, before such certificates existed.

"Explaining this to banks was difficult since rigid internal rules will not allow a mortgage without this particular document – a classic example of form over substance," he said at the time.

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