ASIC Half Yearly Report - Enforcement Outcomes

ASIC today released a report covering enforcement results for the period 1 January 2017 to 30 June 2017. The report highlights investigations undertaken during this period as well as a high level analysis of the results.

The report highlights key enforcement results by misconduct type. Changes in percentage refer to the previous ASIC report (that is, for the period 1 July 2016 to 31 December 2016):

The report notes that the following proportions of misconduct type in the financial services sector:

  • 59% - Credit (28% increase).

  • 8% - Dishonest conduct, misleading statements (17% decrease).

  • 0% - Unlicensed conduct (17% decrease).

  • 3% - Misappropriation, theft and fraud (1% increase).

  • 30% - Other financial services misconduct (5% increase).

In regard to market integrity results by misconduct type:

  • 5% - Continuous disclosure (20% decrease).

  • 47% - Market Integrity Rules (28% increase).

  • 5% - Insider trading (7% decrease).

  • 42% - Other market misconduct (2% decrease).

Corporate governance results by misconduct type:

  • 30% - Action against liquidators (5% increase).

  • 40% - Action against directors (21% increase).

  • 10% - Action against auditors (4% increase).

  • 10% - Insolvency (7% increase).

  • 10% - Other corporate governance misconduct (37% decrease).

ASIC has indicated it is focusing on addressing its enforcement priorities by way of the following:

  • Aligning conduct in a market based financial system with the trust and confidence of consumers and investors.

  • Digital disruption and resilience of Australia’s financial markets.

  • Structural change of Australia’s financial system through market based solutions.

  • Complexity of financial services and products.

  • Globalisation of financial markets and services.

ASIC has indicated that the focus of its enforcement activity for the second half of the 2017 calendar year will cover the following:

  1. Market Integrity - Integrity of financial market benchmarks being a high enforcement priority.

  2. Corporate Governance - ASIC expects its gatekeepers (that is, company officeholders, auditors, insolvency practitioners and other external advisers) to continue to adhere to high standards as required by the law.

  3. Financial Services - With a specific focus on responsible lending practices, advisers’ compliance with the best interests requirements, licensees’ failure to deliver ongoing advisory services to fee paying customers, conduct in the credit repair industry, differentiating between general and personal financial product advice.

ASIC highlighted several certain high profile cases which supported its enforcement objectives:

Foreign Exchange Supervision - ASIC accepted Enforceable Undertakings from Westpac Banking Corporation, Australia and New Zealand Banking Group Limited and Macquarie Bank Limited relation to the banks’ wholesale spot foreign exchange businesses.

On 26 May 2017, ASIC released Report 525 - Promoting Better Behaviour: Spot FX.

Insider Trading - Mr Steven Noske was sentenced to 18 months’ imprisonment and fined $20,000 after being found guilty of engaging in insider trading.

Continuous Disclosure - Mr Benjamin Kirkpatrick, former executive Chairman of Waratah Resources Limited (“Waratah”) was convicted to a charge of aiding and abetting Waratah to breach its continuous disclosure obligations. It should be noted that this is Australia’s first criminal conviction relating to breaches of a company’s continuous disclosure obligations. Mr Kirkpatrick also admitted to authorising the release of false information to the market.

Protecting retail investors and financial consumers - ASIC noted that two individuals were convicted of charges relating to the protection of retail clients.

Consumer credit - ASIC commenced civil proceedings against Channic Pty Ltd and Cash Brokers Pty Ltd after the Indigenous Consumer Assistance Network reported that both companies were dealing unjustly with vulnerable Indigenous consumers. The misconduct involved loans at 48% interest and failing to assess the lending capacity of customers.

Holding Gatekeepers to Account - ASIC highlighted six separate cases where companies and officeholders had charges laid against them for improperly discharging their statutory obligations.

Should you have any queries about ASIC or other issues involving compliance, licensing, or corporate governance, please contact Jeremy Danon, director of Ariel & Associates Pty Ltd on (02) 8223 3355 or at