The Senate economics reference committee has criticised the Australian Securities and Investments Commission (ASIC) for undermining the process of an inquiry into its investigation and enforcement actions as well as submitting numerous public interest immunity claims.
The inquiry, chaired by Liberal senator Andrew Bragg, was tasked with examining the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct.
Among others questions to investigate, this included the potential for dispute resolution and compensation schemes to distort efficient market outcomes and regulatory action and the balance in policy settings that deliver an efficient market but also effectively deter poor behaviour.
Since the inquiry opened in October 2022, it had presented 109 questions on notice to ASIC and 104 had been answered.
In an interim report issued on 20 June, it said feedback during the research had demonstrated “broad community concerns” around ASIC’s role as an investigative and enforcement body for the financial sector.
But when it came to investigating these concerns, the committee said ASIC was often reluctant to disclose information.
“Rather than engaging with the committee in a transparent and accountable manner, from the outset ASIC has chosen to attempt to undermine and influence the process of the inquiry before evidence had been gathered or hearings held,” it said.
“The committee has sought to explore these matters by seeking information from ASIC about how it exercises its investigation and enforcement functions. In doing so, the committee has specifically sought information about particular cases.
“While the committee accepts that there may be a good basis for not disclosing detailed information regarding open investigations, ASIC has not made a good case for not disclosing details for cases that have been closed.”
It flagged ASIC chair, Joe Longo, had opted to make 13 public interest immunity claims to questions put to him with reasons including unreasonable invasion of privacy, prejudice to legal proceedings, legal professional privilege, and undermining the privacy of members of Parliament.
These included on topics such as Nuix insider trading, ASIC’s interactions with parliamentarians, superannuation insider trading, ASIC’s investigations into laboratory company ALS, and property company Bronxx Pty and Magnis Energy insider trading.
The committee had rejected 11 of Longo’s requests and pointed out public interest immunity claims were usually made by the relevant government minister rather than an organisation’s chair.
Of the public interest immunity claims, the committee said it was only interested in pursuing information related to closed investigations so had accepted two of the requests in relation to open investigations.
As a result of ASIC’s lack of co-operation, the committee said it had now been forced to make recommendations that Senate order the information.
“The committee finds it troubling that instead of reflecting on and responding to this broad community concern, ASIC has instead chosen to hinder the committee’s work by refusing to answer questions on notice,” it said.
“The committee has formed a view that ASIC’s refusal to provide this information is obstructing the committee’s ability to conduct this inquiry. As such, the committee has taken the significant action of making recommendations that the Senate order the provision of the information sought.
“The committee expects that ASIC take this as an opportunity to reflect on its conduct to date and to reassess how it will better engage with the committee’s inquiry in an open and transparent manner moving forward.”
ASIC would never have gotten this far without the implicit consent of the large licensees and our “professional” bodies.