Market integrity: Issues relating to ASIC's role and actions
A paper presented by Alan Cameron AM, Chairman, Australian Securities and Investments Commission to the Group of 100 Inc, Congress 2000, Melbourne, 29 March 2000.
The current excitement in the market over high tech dot.com stocks has rightly received a great deal of attention in the media of late. With an increasing number of Australian individuals investing in a stock market buoyant with investor confidence and optimism, start up companies are no doubt finding it easier to raise funds. Even easier now, with the introduction of the CLERP Act and the liberalisation of the fundraising provisions. The same phenomenon is happening in the United States. Arthur Levitt recently remarked at the Finance Conference 2000 that the new, heightened optimism in that country is fuelling an almost unbridled culture of entrepreneurship, innovation and investing. But, he warned, 'history has taught us that the greatest threat to continued prosperity is a loss of perspective'.
Attempting to inject some perspective in order to maintain market integrity is a good description of ASIC's role and that is what this paper will be discussing today with particular focus on accounting issues. The Commission's obligation in relation to market integrity is found in section 1 of the Australian Securities and Investments Act 1989:
'In performing its functions and exercising its powers, the Commission must strive to…maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy... [and] to promote the confident and informed participation of investors and consumers in the financial system'
This paper will discuss ASIC's role in maintaining market integrity and the actions taken by the Commission to achieve its stated obligations.