Role of the Australian Securities and Investments Commission (ASIC)
The Australian Securities and Investments Commission (ASIC) regulates many aspects of Australia’s corporate, market and financial sectors, exercising its powers under the Australian Securities and Investments Commission Act 2001 (Cth) in investigating allegations of white collar crime.
ASIC exercises its investigative powers to prevent and deter unlawful conduct, and in some instances to recover money.
ASIC investigations
ASIC investigations typically involve financial service providers including credit unions, banks and finance brokers. Investigations may be initiated based on reports by members of the public, referrals from other regulators (including foreign regulators), statutory reports from auditors, and through ASIC’s system of surveillance.
In determining whether an investigation should proceed, ASIC will examine a number of factors such as the harm suffered by consumers, and the benefits of pursuing the misconduct, such as deterrence.
ASIC is empowered with a variety of compulsory information gathering powers to obtain relevant information and admissible evidence, should charges later be laid for suspected misconduct. Relevant partied can also be compelled to attend examinations and provide reasonable assistance.
ASIC also cooperates with foreign agencies in its investigation of cross-border white collar crime. This cooperation is often facilitated by international cooperation agreements, such as the IOSCO Multilateral Memorandum of Understanding (MMoU).
Enforcement
ASIC prioritises enforcing:
- The most serious cases, particularly those involving vulnerable consumers.
- Royal Commission referrals.
- Illegal phoenix activity.
- Criminal conduct.
- Misconduct related to superannuation and insurance.
- Auditor misconduct.
- New or emerging types of misconduct, including misconduct carried out online or with the use of emerging technologies.
ASIC has established a dedicated Office of Enforcement, responsible for carrying out ASIC’s key enforcement activities for market, corporate and financial sector misconduct.
Explore recent enforcement outcomes which include convictions and imposition of custodial sentences, large fines, and the banning, removal or restriction of people from providing financial services.
Penalties
ASIC has an arsenal of increased powers to carry out its enforcement agenda, as per new laws introduced under the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019.
The new laws:
- Increase maximum prison terms for the most serious offences to 15 years per individual.
- Increase civil penalties for individuals and companies up to $525 million.
- Introduce a specific civil penalty for breaches of s912A of the Corporations Act 2001 (Cth) to ensure that financial service providers act ethically.
More specific offences apply to certain offences, such as insolvent trading.
Insolvent trading
Insolvent trading occurs when a company is unable to pay its debts and continues to incur further debt. If in your position as a company director you allow your company to operate while insolvent and unable to pay debts, you could be liable to serious penalties including:
- Civil penalties: up to $200,000.
- Compensation proceedings: a compensation order can be made in addition to civil penalties. There is no limit to compensation payments, which could cause a director to become bankrupt and disqualified from managing companies.
- Criminal charges: which can lead to a fine of up to 2,000 penalty units or imprisonment for up to five years, or both.
It is worth noting that while the maximum prison sentence for insolvent trading is five years, breaching additional duties such as recklessly causing harm to the company to obtain a personal advantage could increase the maximum prison sentence up to 15 years, as per the Treasury Laws Amendment Act.
How can we help?
We provide expert advice and representation to individuals and companies who are being investigated by ASIC for a range of offences including corporate and financial crime.
Contact us if you require assistance.
