A former Australian Securities and Investments Commission employee has lodged a complaint to the Senate inquiry into the regulatory body’s practices, alleging ASIC ignored him or her when acting as a whistle-blower.
The person, whose name has been withheld from the published submission, states they are a former employee of ASIC and also of JP Morgan.
But when they tried to blow the whistle on alleged dodgy dealings at JP Morgan – where they worked in post-trade management of the OTC equity derivative business for Asia-Pacific region – ASIC ignored them.
“In the year prior to the GFC, I became increasingly concerned by certain practices within the bank that appeared to circumvent regulatory commitments and risk management expectations,” the person wrote.
These included misleading reports being provided to head office and trades not booked into systems and only being tracked by paper-based legal agreements – which would be torn up if required, therefore leaving no trace, they wrote.
When the person lodged a complaint to JP Morgan senior management the complaint was ignored, and instead their pay was frozen.
The person reported concerns to ASIC on 27 November, 2008, and met two ASIC employees on 5 January, 2009, at an ASIC office.
Instead of asking precise questions about the alleged misconduct, the interviewers asked why the person was risking their employment by making a complaint, the submission said.
“My response that it was important to speak up given my role within a bank, the (then current) GFC, and community expectations was also met with surprise and incredulity,” the person said.
The person wrote they felt ASIC was unprepared to accept reports of misconduct and had no skills to manage such matters.
In 2012, during correspondence with ASIC, the person asked why they had not been told about or offered whistleblower protection. ASIC replied its policy is not to use reports of misconduct by members of the public unless the person providing the information is considered “completely altruistic” or “pure”, the submission states.
Later that year, ASIC allegedly also told the person he or she was at fault for not raising the issue of being a whistle-blower or seeking ASIC’s protection.
“ASIC had received a formal report of misconduct, interviewed me, and was fully aware of the reprisals that I had encountered,” the person wrote in the submission. “To assist any investigation I had also authorised ASIC to contact JP Morgan to make further inquiries. It is unclear how ASIC could dismiss these actions as inconsistent with those of a whistle-blower.
“ASIC’s inability to grasp the obvious and accept that they could have done better is perhaps symptomatic of its performance.”
An ASIC spokesperson told Wealth Professional
while they do not want to comment on this specific case, in general ASIC "greatly values" receiving reports of misconduct from members of the public and whistle-blowers with connections to companies and entities it regulates.
"In every case, we treat reports of misconduct seriously and confidentially, and give them our full consideration."
ASIC has conducted a review and updated its approach to improve the way staff identify and communicate with potential whistleblowers, the spokesperson said.
This submission is one of 374 the Senate inquiry has received over recent months about ASIC’s performance. Many are from ‘mum and dad investors’ feeling powerless because ASIC failed to prevent unscrupulous advice firms losing their money.
The Senate Economics References Committee will receive late submissions on ASIC until 10 January.