ASIC's handling of enforcement matters
Most of the submissions that discussed ASIC's enforcement action generally
criticised ASIC for not taking enforcement action, or if ASIC did take action, it
was argued that ASIC did not do this quickly enough or that the sanctions
imposed were inadequate. However, the committee also received evidence that
presented a different perspective on enforcement. This evidence highlighted the
importance of proper process and the need for a government agency to act fairly
and properly when considering and pursuing enforcement action. The committee
also received evidence that raised questions about the capabilities and
expertise of ASIC in undertaking enforcement action. This chapter explores
ASIC's use of publicity
One case of particular interest to the committee was the experience of
Dr Stuart Fysh. Dr Fysh was an executive with BG Group, an international
energy company involved in the exploration and production of gas. Following an
ASIC investigation, Dr Fysh was prosecuted for insider trading. A jury found
that Dr Fysh purchased shares in Queensland Gas Company Ltd (QGC) between
2 and 8 December 2007 while in possession of inside information concerning
QGC that was not generally available. On 14 November 2012, Dr Fysh was
sentenced to three and a half years in prison with a requirement to serve a
minimum term of 12 months. However, on 17 July 2013 the NSW Court of
Criminal Appeal quashed the convictions and Dr Fysh was released from
prison that day.
It is not the role of the committee to assess and judge the merits of
this particular case that ASIC pursued and the CDPP prosecuted, and the
this report should not be construed as doing this. In particular, the following
statement from Mr Robert Bromwich SC, the CDPP, is instructive:
The prosecution bore the onus of proof in proving the charges
against Dr Fysh. The fact that Dr Fysh was acquitted of two counts does
not mean that those charges should never have been brought against him. It is
entirely contrary to our entire system of criminal justice that an acquittal of
itself means that a case should not have been commenced in the first place, and
I reject such a proposition.
Nevertheless, the case does at least serve as a general reminder that a
tremendous imbalance can exist when ASIC investigates an individual and causes
them to be prosecuted on behalf of the Commonwealth. As Dr Fysh suggested,
'a mathematical certainty' that some of the people ASIC investigates will be
Further, specific aspects associated with how this enforcement action was
managed, such as ASIC's public comments, warrant scrutiny.
The case taken against Dr Fysh has, in his words, had the 'truly
crushing impact of seeing my career and reputation destroyed'.
In particular, Dr Fysh was critical of how his reputation was damaged by ASIC's
public statements prior to the finding of guilt at trial. In 2008, ASIC
issued a media release announcing that it had obtained an asset preservation
order against Dr Fysh and that ASIC was investigating his share trading. Dr
Fysh argued that the freeze order was obtained with his full cooperation and,
although this fact was in his view 'implicit' in ASIC's media release, this was
a distinction 'not drawn by any journalist, news agency or prospective employer'.
It is important to note that, according to Dr Fysh, it was at the end of 2010
that the CDPP and ASIC announced that they would charge him.
The trial took place in 2012.
Dr Fysh provided a number of pointed criticisms of what he described as ASIC's
'announce early and announce big' media strategy. First, Dr Fysh highlighted
the irreversible consequences of a public statement about an individual by ASIC:
Considering the overwhelming asymmetry between ASIC's
resources and those of an individual, and the enthusiasm with which the media
picks up on the regulator's announcements, it is incontrovertible that ASIC
merely announcing its intention to investigate a named individual, of itself
amounts to an immediate and irreversible punishment. Indeed, in my own case and
others I have followed, the sentencing judge noted the personal disruption,
loss of professional standing and reduced earning capacity suffered throughout
a lengthy (just short of five years in my case) investigation and pre-trial
Dr Fysh also queried the regulatory benefits arising from the statement
being issued, compared to the implications for the individual:
Can any possible (and, I respectfully submit, highly
questionable) benefit, such as by way of heightened deterrence, that might flow
from ASIC's precipitate publicity in respect of those who are ultimately proven
guilty, warrant the crushing blow to one who is innocent?
The media release issued by ASIC was compared with the 'tone and tenor'
of statements by the police to the media. Dr Fysh observed that the police
would not name individuals they are contemplating laying charges against.
To further develop his argument that ASIC should be more careful with its
public statements, Dr Fysh suggested that ASIC's criminal cases are more
complex than those undertaken by the police:
ASIC works in a more complex space than policing agencies
dealing with criminal cases where, by virtue of apparent facts and physical
evidence, there will usually be little doubt that criminal conduct has
occurred. The judgements ASIC has to make in determining criminality are more
subtle than identifying a victim or looking for fingerprint and DNA matches.
Dr Fysh also compared ASIC's public statements in his case with ASIC's
guidelines. ASIC policy on public comment is contained in Information Sheet 152
and includes the following statement:
Importantly, if a matter is still in the investigation stage
and an enforcement action has not commenced, it is generally accepted that a
regulator such as ASIC must balance the public interest benefits of making a
statement against the rights of the individual subject to the investigation.
Dr Fysh asserted:
Categorically—clearly—that was not done, in my case. Now what
I see is an organisation that is doing things wrongly and then wallpapering
itself with best-practice notes, saying 'We won't do that.'
Dr Fysh also presented his hypothesis that as a result of the pre-investigation
publicity brought by ASIC, ASIC may have 'predisposed itself to continued
pursuit of allegations that were not supported by the facts'.
Following the conviction being overturned on appeal, some of ASIC's
media releases about charges being laid and the finding of guilt at trial
remained on its website without reference to the NSW Court of Criminal Appeal's
decision. Internet search results ranked the initial media release and related
media coverage higher than any coverage of the outcome of the appeal. The
appellate court's reasons for judgment were published in November 2013. On
11 March 2014, ASIC issued a one sentence media release titled 'Former BG
executives [sic] insider trading conviction quashed' with a link to the court's
Dr Fysh is of the view that although he wrote to ASIC about the lack of an
update, ASIC only issued this media release and updated its website because of
his submission to the committee's inquiry.
In any case, that ASIC issued a media release in March 2014, when the Court of
Criminal Appeal's reasons for decision were released in November, does appear
far from ideal.
ASIC provided the committee with a detailed supplementary submission on the
case taken against Dr Stuart Fysh that rejected each allegation made by
Dr Fysh. On the use of media, ASIC provided the following summary:
ASIC's media releases about the investigation were fair and
accurate reports of public court proceedings and outcomes. They were issued in
accordance with ASIC's media policy outlined in Information Sheet 152 Public
comment (INFO 152) and reflect the fundamental principle of 'open justice'.
ASIC issued an editor's note containing the outcome of Dr
Fysh's appeal the day after the Court of Criminal Appeal (NSW) overturned his
convictions. In addition, at Dr Fysh's request, it issued a new media release
in March 2014 about this outcome providing a link to the Court of Criminal
Appeal (NSW) (already publicly available) reasons for the decision.
ASIC also responded specifically to Dr Fysh's comments about the media
release issued by ASIC in 2008 about the asset preservation order:
On 2 December 2008, ASIC commenced civil proceedings against
Dr Fysh in the Supreme Court (NSW) that were separate and distinct from the
criminal proceedings subsequently brought against him. ASIC produced sufficient
evidence to persuade the court (on an ex parte basis) to make short-term asset
preservation orders against Dr Fysh under s1323 of the Corporations Act 2001.
Dr Fysh was then provided with ASIC's evidence and afforded the opportunity of
challenging any aspect of it and contesting the continuation of the orders, but
he chose to consent to the continuation of the orders. Following this, ASIC
issued 08-85AD on 15 December 2008, which was a fair and accurate report of the
court proceedings and outcome...Further, the proceedings were in open court and a
matter of the public record (no non-publication orders were sought by Dr Fysh
or imposed by the Supreme Court (NSW)). The publication of the advisory was in
accordance with the fundamental principle of 'open justice'.
Evidence on ASIC's use of publicity
from other stakeholders
The committee sought and received the views of key stakeholders about
ASIC's use of publicity and the expectations that should be held of ASIC in
this regard. Professor Bob Baxt noted the implications of a regulator accusing
an individual of misconduct and emphasised that the principle of a person being
innocent until the courts find the person guilty needs to remain paramount:
Regrettably, far too often the media seems to work on the
different assumption that as soon as someone alleges that something bad has
happened with a company or in relation to the way in which people have behaved,
then somehow or other that person or that company is immediately guilty and the
regulator should have acted yesterday in ensuring that the people go to jail or
that some other terrible penalty is put on them.
Professor Baxt used an example associated with the National Companies
and Securities Commission, the predecessor to ASIC, to warn about the
consequences associated of unsubstantiated allegations being made public:
There was one very famous case of a raid on the offices of a
stockbroker for alleged insider trading as a result of media speculation. That
person was arrested. Tremendous publicity surrounded that person's life. That
person committed suicide. Later it was established quite clearly that that
person had been completely innocent of any breach of the law. It is that kind
of psychology and approach by regulators that we need to avoid. And I think by
and large ASIC has been relatively good at making sure that it does not jump
the gun and create impressions of guilt before any inquiry has been held. 
The Corporations Committee of the Law Council of Australia's Business
Law Section advised that it considered the approach taken by ASIC in Information
Sheet 152 is 'the correct one in principle...and for the most part, the correct
one in practice'. It emphasised the damage that allegations can have on an
It would be, in the view of the Corporations Committee, quite
inappropriate for a regulator of any kind to seek to use the mere fact of an
investigation (when by definition no factual findings had been made and no
decision had been taken to commence enforcement action) to achieve a broader
regulatory outcome. Moreover, the publication of mere allegations (that may or
may not be ultimately proven) can be oppressive towards the individuals
involved and damaging even if the allegations are not proven.
The Law Council did express some concerns about ASIC's use of publicity
with infringement notices, where payment is not an admission of liability.
The chairman of its Business Law Section made the following observation:
...people may pay infringement notices for a variety of reasons
quite apart from whether they consider the allegation justified. I hope I may
be forgiven for saying that a company might quite rationally pay an
infringement notice simply to avoid paying their lawyers more to contest the
Nevertheless, the witnesses that the committee questioned on this issue
generally considered that ASIC is conservative in its approach to publicity:
You can compare and contrast that with, for example, Eliot
Spitzer when he was state Attorney-General in New York, or Benjamin Lawsky, who
is a director of the Department of Financial Services in New York at the
moment, who is quite happy to leak the results of their investigations and to
be quite aggressive in his use of public relations. I think the record shows
that ASIC has actually been quite restrained.
* * *
In fact, from time to time ASIC is actually criticised for
keeping investigations close to its chest.
Public comment about ASIC's activities or matters relating to its
functions is a key part of ASIC's role. Statements by ASIC can help promote
compliance with the law and are in accordance with ASIC's statutory objectives
regarding the confident and informed participation of investors and consumers
in the financial system.
It also can promote public confidence in ASIC, something that is currently lacking
in some quarters. However, the committee expects ASIC to carefully consider the
benefits of public comment compared to the damage that can be caused by its
statements, particularly if the comments are premature or ill-timed, or there
is little deterrence or regulatory benefit that can be gained by the comment.
The policies in place appear to be appropriate, although ASIC must ensure that
it is vigilant in ensuring that they are applied in all cases, and that any
public comments are made with a clear regulatory objective in mind.
It is evident, however, that ASIC needs to be more alert and responsive
to updating statements that have been previously published. The committee
appreciates that ASIC maintains a useful historical record of its media
releases. However, internet search engine results in particular can direct the
public to out-of-date information and ensure ongoing reputational consequences
for the individuals or organisations concerned. In the case of Dr Fysh, the
timing of ASIC's media release advising of the appellate court's reasons for
judgment, months after the reasons were published,
gives the committee no reason to believe that ASIC would have its appended its
previous media statements about Dr Fysh had it not been prompted. ASIC should
also change how the updates to past media releases are displayed—simple changes
such as replacing the 'editor's notes' that are buried at the bottom of the
online version of the media release with a more prominent warning that the
information is out-of-date, perhaps immediately below the media release's
heading, would seem more appropriate and helpful to readers.
ASIC should also put in place a procedure to ensure updates reflecting the
outcome of an appeal are not overlooked. This issue does not appear isolated;
the committee has found other examples.
The committee recommends that ASIC improve its procedures for updating past
online media releases and statements to reflect recent court developments, such
as the outcome of an appeal or when proceedings are discontinued. ASIC should
ensure that these updates are made in a timely manner and published in a more
prominent position than what currently occurs.
ASIC as a model litigant
The committee received submissions from individuals who have been
subject to enforcement action by ASIC and were angry about ASIC's conduct. For
example, one submitter told the committee:
I have grave concerns that ASIC has and is currently
violating several of its obligations of rule-bound administration which has
breached a multitude of serious principles including the allocation of rights
and resources, impartiality, distributive justice, rights of the individual and
model litigant principles.
Mr Robert Catena, a former Citigroup stockbroker, provided the following
In August 2008 I was advised that ASIC planned to have a hearing
to institute a banning order against me. At the same time they also informed my
lawyer that they had referred the matter to the...CDPP...for possible criminal
proceedings. My lawyer then sought a stay of the proposed hearing until after
the determination by the CDPP as to whether they would institute criminal
proceedings against me. This was refused by the 'delegate'...(an employee of
I was advised by my lawyer that her decision put me in a
position where I would be denied natural justice, as anything I said to
ASIC in my defence would be passed on to the CDPP. As I wanted to defend
myself, my lawyer asked if ASIC would agree not to pass my testimony to the
CDPP, but once again they refused. Therefore I was left in the insidious
position of not being able to defend myself.
At this point I contend that...acting for ASIC denied me
natural justice, engaged in PROCEDURAL UNFAIRNESS AND BREACHED THE MODEL
ASIC provided detailed answers to questions on notice in response to the
allegations made by Mr Catena. In particular, ASIC noted that the Model
Litigant Rules do not apply in criminal proceedings and that the CDPP conducted
the prosecution. Nevertheless, ASIC believes that at all times both it and the
CDPP 'acted honestly and fairly and adhered to all prosecutorial duties'.
There are examples of ASIC following its procedural fairness
obligations, although they can raise further questions about the conduct of
ASIC's investigations. For example, in May 2013, ASIC issued the following
cryptic media release:
ASIC today provided an update on its proceedings against
former Westpoint officers Norman Carey and Graeme Rundle.
ASIC alleged Mr Carey and Mr Rundle breached their duties as
officers. The trial started in late April 2013...
During the course of the trial, ASIC located a document
relevant to the charges. In accordance with ASIC's procedural fairness
obligations, ASIC immediately disclosed the document and copies were given to
Mr Carey and Mr Rundle, and the court.
Following an assessment of the document in the context of the
prosecution's case, the Commonwealth Director of Public Prosecutions today
advised the District Court of Western Australia that the case should proceed no
further and filed Notices of Discontinuance.
The Rule of Law Institute provided its view on the operation of the
Legal Services Directions across all government agencies. It argued that the
model litigant obligations need to be enforced by the Attorney-General:
It is not sufficient for breaches of the model litigant obligations
to be paid for by way of costs orders made against government agencies in court
cases, because ultimately it is the taxpayer who funds those costs. Government
agencies must be subject to the law as much as individuals and organisations.
Use of expert witnesses
The evidence of particular experts relied on in prosecutions was also
sharply criticised in some submissions. Individuals aggrieved by the
enforcement action taken against them queried how ASIC and the CDPP could
reasonably consider that the expert's evidence was suitable. For example, Mr
Robert Catena relayed comments made by a magistrate in his committal hearing
about the expert witness relied on
[Magistrate O'Day] states 'Unfortunately the expert evidence
that was relied on with respect to the test of materiality in its present form,
I don't think can be used by the court because it didn't adopt the test on
materiality referred to in the Corporations Act, and therefore in my view cannot
be relied on.'
Dr Stuart Fysh also outlined concerns about the expert witness relied on
by ASIC and the CDPP in his case:
As the [NSW Court of Criminal Appeal] has accepted, most of
ASIC's alleged 'inside information' was well known to the market, yet ASIC's so‑called
Expert asserted that every single piece of ASIC's alleged inside information
was both unknown to the market and highly material. The Expert relied upon circular
logic, namely that: 'As the companies' share prices hadn't risen prior to his
trading, the information can't have been in the marketplace at that time'—which
only makes sense if the information is material, one of the key issues the
Expert was asked to opine on in the first place.
Well established requirements must be satisfied for an Expert
to be accredited by the Court, in terms of relevant professional experience and
transparent application of this experience to analysing the evidence forming
the subject of their Expert Report. It was obvious that this Report was deeply
flawed because it canvassed issues far outside the relevant area of expertise
of the Expert. Unsurprisingly, the Trial Judge acceded to Defence requests to
severely circumscribe the Expert's evidence—he was not allowed to be presented
to the Jury as an Expert nor allowed to opine on the availability in the market
of the alleged inside information.
Expert evidence doesn't have to be called in support of
Insider Trading prosecutions but the [Court of Criminal Appeal] concluded that
in my case, where the charges were technically and commercially complex, lack
of Expert evidence regarding public availability and materiality left the Jury
without a safe basis to reason its way to a conviction. The inadequacy of the
Expert and his report were readily apparent to the Trial Judge and [Court of
Criminal Appeal] Justices—and must surely have been clear to both ASIC and DPP.
Why did ASIC persist when they had failed to commission an Expert Report that
would materially assist them? ASIC needs to consider closely the commercial
capabilities brought to bear when investigating me, and the quality of ASIC's
The former chairman of the Trade Practices Commission (now the ACCC),
commented that regulators such as ASIC face restrictions about the money they
can pay to secure and retain experts, both counsel and expert witnesses. He
noted that the regulator faces strict guidelines about its resources, but can
face defendants that do not face such limitations. He remarked that regulators
are 'often prevented from hiring the best experts possible in order to conduct
the relevant litigation'.
Staffing and organisational structure issues
As an agency that receives far more reports of misconduct than it could
possibly investigate, and as a government body expected to act fairly and
exercise its powers for the public good, ASIC has to exercise discretion and
good judgement about what to investigate and how to do it. In doing this, ASIC
relies heavily on the conduct and assessments of its employees, and the
assessments that they make.
This section examines evidence regarding the officers at ASIC that are
responsible for managing enforcement action.
The committee received a small number of submissions that contained
negative or unflattering comments about ASIC employees. Such evidence received
by the committee can generally be categorised as questioning either the
capabilities of the officers or their conduct and professionalism.
The committee recognises that the comments are of varying merit. As the
committee is examining the performance of ASIC as an organisation, and the
committee is aware that it is difficult for current or former public servants
to respond to such claims, the committee has generally withheld the names of
ASIC staff members in written submissions. Further, the following comment by
ASIC's chairman should be noted:
One of the disappointing things about some of the submissions
was the inflammatory tone of criticisms made, particularly about ASIC's staff.
ASIC has exceptional employees. They are men and women who work for the good of
the community. That is because they believe in the public interest. They are
skilled and they are committed to their work. Considering the difficult job
they do, they should receive appropriate respect. Our people have diverse backgrounds.
They have experience in law, accounting, financial services and other areas.
Many have invaluable industry and consumer advocacy experience, and this means
they understand how markets work and issues facing investors, consumers and
wider industry. ASIC employees also undertake ongoing internal training and
have access to industry secondment programs, which further develop their
Nevertheless, the evidence received by the committee warrants
consideration of how enforcement could be affected by staffing issues and the
organisational structure within ASIC.
A strategic review of ASIC was undertaken following the appointment of
Mr Tony D'Aloisio as chairman. That review, completed in 2008, recommended
that the four directorates which ASIC then had (regulation, compliance,
enforcement and consumer protection) be abolished. They were replaced by a
larger number of 'outwardly‑focused stakeholder teams covering the
financial economy' and multiple enforcement teams each tasked with specific
types of misconduct.
The clusters within which the enforcement and stakeholder teams are organised
were introduced during 2011–12, in order 'to better reflect' ASIC's priorities.
This approach differs to that taken in other jurisdictions where dedicated
enforcement divisions appear to be standard. For example:
The US Securities and Exchange Commission (SEC) has five
divisions and an additional 23 internal offices. One of the divisions is
dedicated to enforcement; the remaining four are: Corporation Finance; Investment
Management; Risk, Strategy, and Financial Innovation; and Trading and Markets.
The SEC's regional offices report to both the Enforcement Division and the
Office of Compliance Inspections and Examinations.
The new US Consumer Financial Protection Bureau (CFPB), which
enforces federal consumer financial laws, has a Supervision, Enforcement and
Fair Trading Division, which includes an enforcement office.
The new regulator of the financial services industry in the UK,
the Financial Conduct Authority (FCA), likewise has a dedicated enforcement
section (the Enforcement and Financial Crime Division).
The Community and Public Sector Union (CPSU) advised that the 2008
changes were 'fairly traumatic on staff at the time and caused quite a lot of
defocusing in certain areas'. Since the 2008 restructure there 'has been a move
back to a more coherent approach in the enforcement division', although the
evidence handling unit within ASIC, which services multiple enforcement teams,
is under significant pressure.
Overall, the CPSU considered that morale 'crashed' following the changes, but
that it may be now recovering:
Staff are very focused on their job, want to achieve the best
outcomes they can for the Australian public and are very dedicated to that.
They put in lots of long hours, sometimes horrendous hours, to achieve that. I
think morale has to be on the way up for that to be happening.
Ms Anne Lampe, a former ASIC employee and financial journalist, told the
Whilst I worked at ASIC I had nothing but the highest regard
for the committed and hard-working investigators and lawyers in the enforcement
section of ASIC. But there seemed to be some blockage at the top. Action seemed
always to be taken too late.
A former enforcement adviser also commented on the commissioners and
senior management. He focused on the qualifications and expertise of the senior
officers, and suggested that the current composition may be impacting ASIC's
approach to enforcement and how enforcement matters are handled:
There seems to be a lack of experienced staff with direct
experience in successfully investigating and prosecuting complex corporate
fraud matters. For example, as of today, not one person at the ASIC commission
level or, at best, one or two senior executives have actual experience in
conducting a criminal investigation or giving evidence in a court themselves.
In other words, how can you expect your staff to conduct a complex
investigation or lead one when you have never done one yourself?
Another former employee suggested that ASIC loses cases because of
financial constraints and limits on how their employees can be utilised:
[ASIC] think that they can win court cases doing 38 hours a
week, when the other side are doing 90 hours a week. When I put in for my
overtime on Nomura, it was rejected, but they were happy with the result and it
was these same people taking a lot of the credit. However, if I had not done
the work, the case would have been a disaster.
ASIC is also required to compete with private sector firms for suitably
qualified and talented employees 'with the disadvantage of not being able to
pay market-equivalent salaries for people with cutting edge legal and financial
expertise and experience'.
Another challenge to attracting and retaining talented enforcement employees
could be the nature of the work that enforcement employees are required
to do compared to the opportunities available elsewhere. Former ASIC employee
Mr Niall Coburn stated:
In my team we used to mentor the younger staff coming in.
Lots of young people at ASIC now think there is no future for them in terms of
experience. They are not given the opportunity to go to court. They are not
given the opportunity, say, if they were in a law firm.
The competence of particular ASIC officers or teams was commented on by
individuals that had experienced enforcement action brought by ASIC. Dr Stuart
Fysh argued that ASIC 'absolutely failed to bring to bear the right sort of
commercial competence in establishing the facts against me'. He provided the
...the gentleman who investigated on behalf of ASIC was a
part-time investigator who had been brought back. He said in court, very
clearly, that if the alleged inside information was out there, unless he could
find evidence that BG [Group] was aware of the alleged inside information, he
just ignored it. Of course, that is not the test.
What was the professional competence of that person? The
answer is not to criticise that guy; the issue for the senior management of
ASIC is: what are the standards of competence; what is the job description of
an investigator? I guess the issue, for me, is what governance structures exist
within ASIC so that you do not have that end-to-end responsibility of one
person with all the imbedded assumptions he has? 
Dr Fysh questioned the internal structures within ASIC and suggested
that ASIC should employ someone 'whose KPI, whose bonus, depends on killing
ASIC cases' so that ASIC do not take cases where 'they would have ended up
The above paragraphs indicate some disquiet about the expertise that
ASIC brings to enforcement, both in terms of the expertise it secures through
expert witnesses and the capabilities ASIC possesses in house. Before proceeding
the committee wishes to acknowledge that ASIC's employees have committed
themselves to public service and to achieving the best results for the
Australian community. The committee thanks ASIC's employees for their hard work
and dedication. Although some concerns have been considered, the committee has
not entertained allegations that appear vexatious or simply attempt to 'name
and shame' particular employees, rather than engage in a constructive
discussion about ASIC's performance.
Like other organisations, ASIC is dependent on the good judgement and
conduct of its employees. There will be individual cases where trust is
misplaced, expertise is lacking or where honest mistakes will be made. There
will also simply be differences of opinion about particular matters. After
reviewing both the public and confidential submissions received during his
inquiry, it would be wrong for the committee to conclude that there is a
significant or widespread problem within ASIC regarding its employees. At this
time, the committee has no reason to consider that ASIC cannot manage any
issues about the conduct of individual employees by regularly reviewing its
supervision and performance management arrangements
to ensure they are best practice and vigilantly applied. For the avoidance of
any doubt, the committee is only aware of isolated complaints regarding ASIC's
employees, and the committee is confident that the vast majority of ASIC's
employees perform their duties appropriately and as effectively as possible.
There are other ways to improve the expertise and skillsets of ASIC's
staff. Increasing the use of secondments to other law enforcement agencies will
allow new ideas about enforcement to infiltrate and be adopted within ASIC.
ASIC also needs
to be more willing to acknowledge that mistakes will occasionally be made and
to identify ways to learn from them. When ASIC is unsuccessful in a court action,
particularly if the court criticises how the matter was pursued, ASIC's leadership
should mandate that a two-step assessment process be undertaken. The first step
would be an internal review of how the case was managed. The second would be an
independent review of the case and what went wrong, undertaken remotely from
any officers engaged in the matter. The commission and enforcement teams would
then be briefed on the findings and lessons identified by the independent
review. The two-step process would allow ASIC officers to reflect on the case
while also ensuring that another informed perspective is sought. The
independent review is particularly important; the committee does not believe that
ASIC should rely only on its own self‑analysis. However, by conducting an
internal review in addition to the external review, ASIC's commissioners and
senior management will be able to compare the findings of both and then consider
whether the assessment offered by the internal review is frank, truly
reflective and indicates a culture that is receptive to identifying and implementing
The committee recommends that when ASIC has been unsuccessful in court
proceedings both an internal review and an independent review of the initial
investigation and case must be undertaken.
Finally, the committee notes that ASIC's skillset may be strengthened by
other less direct means. A possible way to convince a greater number of talented
individuals to undertake at least part of their career at the regulator is by an
enthusiastic and energetic leadership at ASIC pursuing more high-profile
enforcement cases, particularly through the courts. Building a reputation of a
tough and effective agency will make it easier for ASIC to attract, employ and
retain talented and driven individuals.
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