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Friday 31 January 2014

14-018MR ASIC enforcement report – July to December 2013

ASIC today released its fifth six-monthly enforcement report, detailing outcomes achieved between 1 July 2013 to 31 December 2013.

ASIC achieved 340 enforcement outcomes. This included criminal as well as civil and administrative (e.g. a banning or disqualification) actions, and negotiated outcomes, including enforceable undertakings (EU).

There were 112 outcomes achieved in the market integrity, corporate governance and financial services areas, and 228 in the small business area.

Current areas of focus for ASIC include cracking down on misleading advertising of products and services, market misconduct, including insider trading, and the responsibility of gatekeepers.

‘Future areas of focus include loan fraud, false accounting, and takeovers and shareholder disclosure, as well as the ongoing focus on advertising,’ ASIC Commissioner Greg Tanzer said.

‘ASIC’s crackdown on brokers submitting fraudulent loan applications and similar behaviour has seen several individuals criminally charged or banned. We currently have more than 20 investigations underway involving falsification of loan documents and loan applications.’

For the last six months some of the more notable outcomes included:

  • Mr Rental Port Augusta released Indigenous consumers from their rental contracts following an ASIC surveillance. ASIC took action in this case to protect financially vulnerable people from exploitation (refer: 13-288MR)
  • The Full Court of the Federal Court of Australia upheld ASIC’s appeal against the court-approved $82.5 million settlement between former Storm Financial investors and Macquarie Bank. ASIC’s pursuit of this matter demonstrates its determination to secure fair and adequate compensation for affected investors (refer: 13-214MR)
  • The Federal Court found five former directors of Australian Property Custodian Holdings Ltd (APCHL) liable for breaching their duties as officers of APCHL. This was a significant outcome for investors. The conduct of the APCHL Board was unacceptable and this was reflected in the Court’s judgment (refer: 13-339MR)
  • Clestus Weerappah, a former director of Dollarforce Financial Services Pty Ltd, was jailed for four years over his role in the collapse of the property development group. The sentence sends a clear message to corporate Australia that ASIC, the community and the courts will not tolerate criminal behaviour (refer: 13-252MR)

ASIC’s work will also see more than $15 million refunded to consumers (refer: 13-159MR, 13-190MR and 13-231MR).

ASIC also secured EUs with a number of high profile companies including NAB, UBS, Wealthsure and Commsec.

‘Negotiated outcomes, such as EUs, can offer a faster, more flexible and effective regulatory outcome than could otherwise be achieved through administrative or civil action,’ ASIC Commissioner Greg Tanzer said.

‘Since 1 July 2011, ASIC has entered into 63 EUs with entities and individuals. Many of these enforceable undertakings have required entities to pay compensation to consumers, improve internal compliance arrangements, appoint an independent expert to oversee elements of the entity’s business and report back to ASIC on performance.’

Download Report 383 ASIC enforcement outcomes: July to December 2013 (REP 383)

Enforcement outcomes: 1 July to 31 December 2013

Below are the key statistics from REP 383, adapted from Table 1 of the report. All figures in tables are outcomes per defendant.

Area of enforcement
Criminal
Civil
Administrative remedies
Enforceable undertakings / negotiated outcomes
Public warning notice
Total
Market integrity (all areas)
8
-
10
3
-
21
Insider trading
7
7
Market manipulation
1
1
2
Continuous disclosure
3
3
Market integrity rules
7
7
Other market misconduct
2
2
Corporate governance (all areas)
7
3
2
1
-
13
Action against directors
7
7
Insolvency
1
1
Action against liquidators
2
2
4
Action against auditors
1
1
Financial services (all areas)
12
5
34
23
4
78
Dishonest conduct, mileading statements, unconscionable conduct
4
6
5
1
16
Misappropriation, theft, fraud
5 [1]
5
10
Credit
2
14 [2]
9
3
28
Other financial services misconduct
1
5
9
9
24
Subtotal
27
8
46
27
4
112
Small business compliance and deterrence (all areas)
186
-
42
-
-
228
Action against directors
181
42 [3]
223
Efficient regiatration and licensing
5
5
Total
213
8
88
27
4
340

[1] Includes one outcome currently under appeal.
[2] Includes two outcomes currently under appeal.
[3] Includes 10 credit related outcomes.

Download previous enforcement reports

Editor's note
On 3 February 2014 this media release was edited to reflect the fact BT was not subject of an EU between 1 July 2013 to 31 December 2013.

Last updated: 03/02/2014 12:00