Is ASIC a toothless tiger?

Is ASIC a toothless tiger?

Is ASIC a toothless tiger?

The Australian Securities and Investment Commission is the regulatory agency in Australia with the primary responsibility for enforcement of the law as it applies to companies registered in Australia. The administrative function of ASIC is to maintain an accurate and reliable corporate register so that it is relatively straight forward to gather public information about companies, both private and public which are registered in Australia. Australia has recently witnesses some of the biggest corporate collapses in history with the nation's largest superannuation fraud, the implosion of a string of high risk investment schemes and it seems that the court system remains a hive of inactivity when it comes to corporate crime.

The first is theOpes Prime debacle where there has not being a single prosecution that has resulted which liquidators of those corporations have been calling for. The one recent example which could be raised in defense of ASIC's record is that the corporate regulator recently launched a $1 billion damages action against the financiers behind the Storm Financial debacle; the Commonwealth Bank, Macquarie and the Bank of Queensland. However, even this was simply another negotiation. The agency actually onlythreatened to launch action if the banks didn't arrive at a commercial settlement within three weeks but these negotiations are already eight months old so there is no sense on pinning hopes on that.

This is another example of a trend which has progressed from the time when a deal struck with the former Telstra director, Steve Vizard who admitted using confidential information in exchange for being pursued only through the civil courts. In this case, the judge in the civil case, Justice Ray Finkelstein, took it upon himself to double the penalty recommended by the regulator. The agency has also relied heavily on liquidators toinvestigate of corporate collapses such as Babcock & Brown, ABC Learning and Allco Finance. However, in these cases, often it has been incumbent upon the liquidators to commence the litigation related to these corporate collapses. In the case ofB&B, more than $5 billion of creditors' and shareholders' funds were evaporated. There have been absolutely no substantive repercussions for the key actors who should be responsible for this collapse. In the case of theHIH collapse, a Royal Commission wasempaneled, and this led to several high profile criminal prosecutions and a complete overhaul of the Australian Prudential Regulatory Authority. No such redemptive whirlwind has befallen those involved in the more recent collapses.

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