It’s Time ASIC Did Its Job

[](https://drive.google.com/file/d/136vVnYjOIAJuSbEnaUtJbTUktyCyKh7Q/view?usp=sharing) It has not been a good year for corporate law enforcement in Australia. PwC is just one example of a systemic failure to enforce the laws the federal Parliament enacts. Public hearings into the corporate cop ASIC demonstrated two major points: one, ASIC is too slow to act and, second, ASIC too readily drops major cases. Firstly, the pace at ASIC seems to be glacial whether it concerns corporate law enforcement or allegations of financial services misconduct. The industry body representing liquidators told the Senate they have sent official warnings to ASIC about rogue operators which ASIC has misplaced (lost!). It is very hard to enforce the law when you lose reports of misconduct. It would be reasonable to assume that a professional body would have its representations treated seriously. Whistleblowers do not seem to be treated seriously by ASIC. In one case a detailed brief of evidence took 18 months for ASIC to arrange a meeting with the informant. Sadly this is a pattern of behaviour which has been replicated across the board and also features in financial conduct enforcement. The Financial Advice Association told the Senate hearings that they had reported 11 bad apple advisers to ASIC in the past few years. The result: one response from ASIC. This is very troubling when you consider the evidence from industry participants who have filed breach reports with ASIC but they also hear nothing back from the regulator. One example which was tendered to the Committee was that two breach reports were filed about an adviser who had allegedly forged signatures and engaged in fraud. These forms received no response for more than two and half years. It seems incredible that this is the case but it is. Secondly, ASIC appears to drop cases too readily. The Senate was told about allegations of how ASIC facilitated the debasing of the largest float of 2020: Nuix. In the Nuix case, ASIC suspected there had been insider trading but decided not to pursue it. They also decided to drop any action which could have been taken on a prospectus which caused losses of around $650 million for mum and dad investors. Their decisions to drop cases on insider trading and a clearly suspect prospectus sends the wrong message to corporate criminals in Australia. Not only did they drop the cases, they didn’t even try them in court. It seemed ASIC had decided it wasn’t worth the effort to enforce the law which contains strong sanctions for both insider trading and for misleading communications to investors. ASIC decided not to pursue the matters because it thought the case would be lost. But ASIC didn’t know all the information because the investigation was lacking. We know this because in testimony to the Inquiry, Mr Rolfe Krokle, who was a Vice President at Nuix during this period, was not interviewed. By closing investigations before conducting interviews, ASIC was potentially deprived of obtaining material information needed to make a decision. We only know about ASIC’s thinking because ASIC finally provided the Senate with the information on cases after stonewalling for more than half a year. Perhaps the most damaging part of the Senate hearings was that ASIC failed to properly respond to a whistleblower. The whistleblower had sent various letters to ASIC setting out concerns with the prospectus and on insider trading risks but ASIC didn’t bother to formally interview the whistleblower or other senior executives. So where is the Government in all of this? The Government is actively supporting ASIC’s attempts to obstruct the inquiry and avoid scrutiny. Now, ASIC is hitting small businesses on Labor’s watch. They are increasing the levy on each financial adviser from $1100 per annum to $3200. Labor should step in and cancel the new tax and stop obstructing the Senate’s efforts to fix ASIC. I want to see more people behind bars and heavier fines to act as deterrents. It’s pretty simple but Labor doesn’t get it. **Senator Andrew Bragg is Chair of the Senate Inquiry into ASIC**