ASIC commissioner Greg Tanzer has released a Youtube video yesterday justifying the corporate watchdog’s enforcement record for the six months to the end of last year.
He begins by saying the latest half-yearly enforcement report proves ASIC has a strong enforcement record.
“For the six months to the end of 2013 ASIC achieved 340 enforcement outcomes. These included criminal and civil action as well banning or disqualifying individuals and companies,” he said.
There were 112 outcomes achieved in the market integrity, corporate governance and financial services areas, and 228 in the small business area.
A notable prosecution which ASIC helped with was that of Clestus Weerappah, a former director of Dollarforce Financial Services, who was jailed for four years over his role in the collapse of the property development group.
But successful enforcement does not always mean jail sentences, Tanzer said.
“Putting someone behind bars is the ultimate deterrent, but if we can change the market's behaviour by other enforcement means, we will.”
For example enforceable undertakings let ASIC drive changes to systems and culture within an organisation involving regular ASIC checks, he said.
Since 1 July, 2011, ASIC has entered into 63 EUs with entities and individuals.
The latest was with BNP Paribas, which has promised ASIC it will clear up its act after it suspected its traders were trying to influence Australia's benchmark interbank lending rate.
“A negotiated outcome doesn't involve a court judgment or a court-imposed penalty. But it does have a significant impact, because for the financial services firm involved it is about changing behaviour and making sure that change lasts,” Tanzer said.
ASIC's enforcement work during the six month period saw more than $15 million refunded to consumers, Tanzer said.
“At the moment ASIC is focusing on stopping misleading advertising of products and services and market misconduct, including insider trading. We are also strong on the responsibility of gatekeepers – people like directors, financial advisers, auditors and liquidators.”
Future areas of focus include loan fraud, false accounting, and takeovers and shareholder disclosure, as well as an ongoing focus on advertising.
He stressed that enforcement is often not simple or swift, but a “contested process” that takes time and resources.
ASIC has come under fire for inefficiency over the past year and is being investigated by the Senate, which is due to report back on May 30, 2014.
The inquiry has recently been re-opened to accept new submissions on how Qantas and Virgin secured private ‘no-action’ letters from ASIC, which allowed the airlines to send millions of unsolicited payment cards to their members.
Advisers are often unhappy with ASIC’s perceived inefficiency. Wealth Professional
has recently seen a letter to Treasurer Arthur Sinodinos from Rynco director Peter Corrie, which asks the government to investigate ASIC and change the watchdog’s attitude towards advisers to one which is more reasonable and co-operative.
“[ASIC] have gone way beyond their role of governance by using surveillance, shadow shopping and audits that are devious and coercive activities to find fault with our business activities wherever possible,” Corrie said.
“Their agenda is not only inflexible but aggressive and they can make it very difficult indeed for advisers to carry out their business in a complex market.”
Watch Tanzer’s video here.