Mar 3, 2014

Why ASIC chases the tiddlers and lets the big fish go

Being a corporate watchdog is only part of ASIC's remit. The other task is to raise money for the federal government -- as John Addis argues, these two demands are often at odds with each other.

Under the current regime at the Australian Securities and Investments Commission, insider trading, ripping off investors and breaching director’s duties can be a highly profitable activity. The risk of getting caught is low and the penalties if you do get caught minimal.

Part of the reason is ineptitude and indifference. Michael West in the Fairfax press on Saturday revealed he had warned ASIC of the looming disasters of Storm Financial, Allco, Babcock & Brown, ABC Learning and others. The regulator, though, wasn’t interested. Six months before Storm collapsed, ASIC gave it a “clean bill of health”.

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7 thoughts on “Why ASIC chases the tiddlers and lets the big fish go

  1. stephen Matthews

    The handing over of money by ASIC in million dollar licks to barristers and the securities/corporations law practices of the big law firms is clearly a broken model. It is egregious failure when devoid of any sense of justice or service to community the practitioners simply view their payer client as another dopey client.
    ASIC could fund their own litigation team – populated by recent law graduates with a sense of mission and vocation – and achieve better results for a fraction of the cost.
    Soon enough those green ASIC solicitor recruits will be showing the complacent law firms how it’s done and will proudly declare ” sure I’m an ASIC litigation solicitor”.

  2. Chris Seage

    I don’t like the chances of the government making ASIC more accountable for their actions. Just look at the current inquiry into the performance of ASIC by the Economics References Committee as an example. Lawyer Stewart Levitt (who is leading a class action for many Storm Financial investors) had his submission substantially redacted before being placed on the parliamentary website. The reason? Because there were issues raised about former Chairman of ASIC Tony D’Aloisio, ASIC generally and PPB Advisory, being CBA’s favourite Receivers and Managers. Pathetic.

  3. The diving swan

    Is not a partial answer that ASIC be awarded costs on successful prosecutions? At least part of the cost may be defrayed.

    I also suspect that trying to do the prosecutions in house will simply lead to the better prosecutors being cherry picked by the very firms who are being sought to be sacked.

  4. klewso

    Whitehaven – Moylan – and letting the lazy media go?

    Glenn Stevens makes a statement, stocks drop – nothing?

  5. AR

    Wouldn’t it be strange if the big buck$ barri$ter$ ASIC briefs to run their cases had partners who’d acted for the defendants? Nahhh, that couldn’t happen.

  6. Rpinglis

    Relative to the sums raised here, the Royal Commission into Unions is small beer. However I cannot envisage the current government doing anything about the ASIC performance and internal contradictions and conflicts. I hope to be proven wrong and soon, but from its few actions contrasting to its robust rhetoric to date, the current government has worrying echoes of the Fraser government. A government that was if not rort friendly, certainly rort complacent and/or coward by the rorters in its support base into costly inaction.

  7. Brendan Jones

    I looked at ASIC’s information on whistleblowing recently. There are many loopholes:

    There are restrictions on who a whistleblower they can make a report to, and of course the press is a no-go zone. ASIC also restricts who can make whistleblower reports; For example, a customer or bystander who learns of corruption isn’t protected. And if corrupt management suspects an employee or supplier is about to blow the whistle, all they need do is terminate them before they file a formal complaint. They can terminate them after the fact by “doing a CSIRO” and claim the reasons for terminating them (e.g. cutbacks) are unrelated to their whistleblowing.

    Also the whistleblower must identify themselves to people they barely know; This is beyond stupid. There are also loopholes which allow the whistleblowers protection to be nixed, exposing them to civil and criminal penalties. And if they are dragged into court, ASIC won’t do anything to help them. The whistleblower is supposed to fund their own defence.

    Then look at ASIC themselves. Their treatment of the CBA whistleblowers was shameful; I wouldn’t trust them. And Will Matthew’s FOI request is now in its 10th year. Nothing to hide much?

    And for all this the whistleblower gets nothing. Why do it?

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