░░░ INSOLVENCY INTERFACE

The Australian Securities and Investments Commission (ASIC) has completed a review of penalties in Australia for corporate wrongdoing to assess whether they are proportionate and consistent.  The review compared ASIC’s penalties with those in other countries; those of other Australian regulators; and across ASIC’s regime.

Results of this review were released yesterday (20 March 2014) in Report 387 – “Penalties for corporate wrongdoing”.

Key findings

ASIC says the key findings show that:

• on the international comparison —
  • while our maximum criminal penalties—jail and fines—are broadly consistent with those available in other countries, there are significantly higher prison terms in the US, and higher fines in some overseas countries for certain offences;
  • there is a broader range of civil and administrative penalties in other countries, they are higher, and they include the ability to remove financial benefit from wrongdoing (i.e. disgorgement);
• on the comparison with other Australian regulators—
  • the maximum civil penalties available to ASIC are lower than those available to other regulators and are fixed amounts, not multiples of the financial benefits obtained from wrongdoing; and
• on the comparison across ASIC’s regime—
  • there are differences between the types and size of penalties for similar wrongdoing. For example, providing credit without a licence can attract a civil penalty up to ten times greater than the criminal fine for those who provide financial services without a licence.

ASIC media release

In releasing the report ASIC Chairman Greg Medcraft said:

“Effective enforcement is critical for ASIC in pursuing our strategic priorities of promoting fair and efficient financial markets and ensuring confident and informed investors and financial consumers. It depends on outcomes that genuinely deter corporate wrongdoing. The public expects ASIC to take strong action against serious corporate wrongdoers. Those who break the law and cause severe damage should face tough penalties. This will make them and others think twice about breaking the law. Tough penalties have a powerful deterrent effect.”

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