A group of corporate law scholars at the Adelaide Law School recently made a submission about the performance of ASIC to the Senate Economic References Committee. The Committee’s wide-ranging inquiry was called as a consequence of disquiet about the way ASIC handled whistleblowers who had revealed conduct within the Commonwealth Bank’s financial planning arm. Dr Suzanne Le Mire, Associate Professor David Brown, Associate Professor Chris Symes and Ms Karen Gross have submitted that the inquiry provides an opportunity to reassess and reform some aspects of the system of corporate regulation in Australia.
In particular the submission notes the expense and complexity involved in pursuing corporations and officers under the civil penalty scheme set out in the Corporations Act 2001 (Cth) and makes concrete recommendations as to how this system might be improved. These include extending the removal of the privilege against exposure to penalties to pecuniary penalty orders, a new ‘objects’ section at the beginning of Part 9.4B to state the aims of the Part, and a procedural ‘roadmap’ for civil penalty proceedings.
The difficulty experienced in employing the civil penalty procedure has led ASIC to rely quite heavily on enforceable undertakings. The submission explores some of the shortcomings of this approach and advocates for more extensive research to test whether enforceable undertakings generally, and in specific cases, have proven to be a ‘more effective regulatory outcome’. It also recommends that consideration be given to a more structured discretion in application of the factors in ASIC’s Regulatory Guidance note 100.24, for example, by prioritising consumer and investor harm as a primary concern. The submission proposes that more serious consequences flow from the breach of an enforceable undertaking including that the undertaking be annulled or set aside, and there be capacity for the original breaches to be dealt with under the court’s jurisdiction.
In support of ASICs transparency and accountability, Le Mire, Brown, Symes and Gross recommend that ASIC provide greater access to statistics, along the lines of that provided by the ATO and AFSA . In order to promote ‘informed participation’ in the market, information should be accessible and presented in an informative way. In relation to information about insolvency appointments, for example, such information is of use not just to academics but to market analysts, economists, the business media, the insolvency and legal professions and professional bodies. All these actors play a role in informing the market and the public. Indeed such information can be of particular use to ASIC in its role as regulator.
Cooperation between ASIC and other regulators has been in the spotlight in recent times . The submission examines several examples of instances when coordination has been less than optimal and notes the need for practical cooperation and open communication between regulators.
Finally, the submission criticises the current whistleblower provisions contained in ss1317AA-AE of the Corporations Act. It argues that these provisions are drafted in such a way that they may discourage useful whistleblowers. Several proposals are made to the extend the whistleblower protections, including to expand the categories of persons protected and the kinds of conduct revealed, include whistleblowers who are initially anonymous, and extend protection to those who act with impure motives.
The full submission is available here
 Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Collapse of Trio Capital, AGPS, Canberra, 2012, 153. See, also, for example, Malcolm Maiden, ‘ASIC must act fast on graft claims’, Business Day, 4 October 2013 .