Opening statement by ASIC Chair, Joe Longo at the Parliamentary Joint Committee on Corporations and Financial Services, 18 June 2021, Parliament House, Canberra.
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Good afternoon Chair and Committee members.
I am pleased to appear for the first time before this committee today as ASIC’s Chair.
I am joined in Canberra by newly appointed Deputy Chair Sarah Court, Deputy Chair Karen Chester and Commissioner Cathie Armour, and from Melbourne by Commissioners Danielle Press and Sean Hughes.
Also appearing with us is ASIC’s Chief Operating Officer Warren Day, General Counsel Chris Savundra and Executive Director of Strategy Greg Kirk here in Canberra.
I will start by acknowledging, as I did recently at the Senate Economics Legislation Committee, that ASIC takes its accountability to the Parliament and people very seriously.
We recognise the important role that this committee has in overseeing our activities and responsibilities, and legislation relevant to our work.
This is a very challenging time for ASIC as it emerges from the legacy of the Financial Services Royal Commission, the Covid-19 pandemic and recent Commission level changes.
ASIC is also entering a new phase of its enforcement and regulatory work. We are finalising enforcement actions arising from the Financial Services Royal Commission and are working towards implementing the last of the law reforms emerging from the Royal Commission’s recommendations.
I believe that ASIC’s strength and effectiveness as an institution can and will be enhanced. This includes further improving our governance structure to support the Commission and our senior executives to be more effective decision makers.
I have begun engaging widely with ASIC staff and stakeholders to further understand ASIC’s current strategy and approach to regulation and enforcement. This engagement and collaboration will assist me and the Commission to shape and develop ASIC’s new strategic priorities and longer-term strategy.
From an internal perspective, I have commenced some work to look at ASIC’s infrastructure. I want to consider ASIC’s operating model and organisational structure in our key internal operations and processes, including corporate services, information technology, finance, people and development, and compliance.
In conclusion, there is a lot of work ahead for ASIC, but I am confident about its future.
In closing I wanted to briefly address comments made in Parliament yesterday regarding the NUIX IPO. The NUIX prospectus was reviewed by a specialist team at ASIC. We take all complaints and intelligence we receive very seriously. This was no exception. We considered the complaint and requested further information from the company in accordance with our usual procedures.
ASIC’s role and approach to the review of prospectuses is ASIC does not consider the merits of an offer when reviewing a prospectus. The market needs to assess the merits of the offer. ASIC’s reviews are limited to disclosure. We may intervene if we believe a document makes material misleading statements or omits information that is required for an investor to make an informed investment decision. We are very aware of the current market concerns and are conducting a review of the NUIX IPO.
Can I take the Committee to what happened last November. NUIX lodged a prospectus with ASIC on 18 November 2020. Between 23 and 26 November ASIC received three complaint letters from a law firm on behalf of an anonymous client. Based on the complaint, the specialist team questioned the company on historical accounting restatements in relation to a number of areas of revenue recognition. Based on the response ASIC received, it did not appear that the prospectus was misleading or deceptive or contained any material omissions.
I have spoken to the relevant Senior Executives and they have confirmed to me that Commissioner Armour has not been involved in, or otherwise sought to influence, ASIC’s approach to the review of the NUIX prospectus. One of the complaint letters was sent to ASIC’s Commission members and this was referred to the team in accordance with our usual processes. The relevant ASIC teams have reported to the Commission on their approach and progress to date. The Commission has not made any decisions in relation to the NUIX IPO. Our current review is being progressed by the responsible executives involved.
Before my concluding my opening remarks, I turn to the concern raised about Commissioner Armour. ASIC has clear procedures in place for the disclosure and management of conflicts of interest by ASIC Commissioners. These are based on disclosure of material personal interests to the Chair and to fellow Commissioners. Prior to and at the commencement of each Commission meeting or Commission Committee meeting, Commissioners are asked to disclose material personal interests or any other interest that related to the matters to be discussed at the meeting. Commissioner Armour does not hold any Macquarie shares or otherwise have any financial connection with Macquarie (other than a bank account). It is more than 8 years since Commissioner Armour was employed by Macquarie. At this point in time I don’t believe Commissioner Armour has a conflict of interest. As this matter progresses the Commission will follow its usual processes to assess and determine whether there are any conflicts of interest.
In concluding my opening comments on this matter, let me say clearly that I believe that ASIC’s processes and procedures were properly followed by staff, Commissioners and Acting Chair Chester.
I look forward to working with this committee and to taking your questions this afternoon.