ASIC publishes approach to enforcement

The Australian Securities and Investments Commission (ASIC) has released a statement of its approach to enforcement and other policy documents discussing how it undertakes investigations and enforcement activity.

ASIC Chairman Greg Medcraft said: ‘ASIC wants the public to understand how we use our enforcement powers and why we might pursue a particular type of outcome in a given case. We are improving the transparency of our enforcement approach to help people understand our enforcement role and what we want to achieve by using our enforcement powers.

‘The enforcement guide is about letting Australians better understand how and when we will take action. It is about what happens when the law is broken or when someone thinks they have broken the law and complains to us. It provides transparency about what matters we take on, what matters we don’t and why we seek particular remedies.’

ASIC’s decision on whether to take enforcement action is based on assessing:

• evidence
• cost vs regulatory benefit; and
• level of harm or loss.

‘Our revised public comment policy will help stakeholders understand how and when we can comment on investigations. Every year ASIC conducts scores of investigations, some of which will never reach the courts. So ASIC has to balance the need for public transparency with the need to protect individual reputations,’ Mr Medcraft said.

‘Enforceable undertakings can achieve a more effective regulatory result than other remedies in some cases – such as an improved compliance or a quicker outcome for investors. This guide will help spell out how and why we use them and what we expect from parties who enter into them.’??The enforceable undertaking guide outlines:

• what an enforceable undertaking is;
• when ASIC will consider accepting an enforceable undertaking;
• what terms are or are not acceptable to ASIC; and
• what happens if an enforceable undertaking is not complied with.

To further increase transparency, ASIC shortly plans to publish a report on key enforcement outcomes finalised during the period from 1 July to 31 December 2011. We envisage issuing similar reports bi-annually.

Download:

• Information Sheet 151: ASIC’s approach to enforcement (INFO 151).

More information and links to the policy documents are available here.