ASIC’s enforcement activity resulted in 279 criminal charges being laid in the second half of 2019, up from 70 in the previous six months
These agreements between individuals or companies and the regulator which do not require an admission of liability were once prevalent in ASIC’s enforcement activity, with 21 EUs hatched out in 2018.
That was before Royal Commissioner Kenneth Hayne lampooned ASIC for its perceived preference to reach agreements with companies and individuals behind closed doors rather than litigate in the courts.
Enforceable undertakings are widely seen in the corporate sector as being the outcome most often sought by in-house and general counsel and the blue chip firms advising them and being effectively a slap on the wrist approach.
“The conduct regulator, ASIC, rarely went to court to seek public denunciation of and punishment for misconduct,” Commissioner Hayne wrote in his interim report into misconduct in the financial services sector. “A regulator speaking softly will rarely be effective unless the regulator also carries a big stick.”
In a foreword to the most recent enforcement update, Mr Crennan reflected on the now-infamous “why not litigate” strategy inspired by Hayne, explaining ASIC has been making use of its additional resources to focus more on court enforcement.
“As I have emphasised over the past year, ASIC has a clear resolve and the Office of Enforcement is delivering on the publics expectation that we hold wrongdoers to account,” Mr Crennan said.
He said that looking forward ASIC’s strategy will be to “identify, prioritise, and act quickly and decisively on the most important enforcement matters to obtain criminal and civil court-based outcomes that discourage and punish misconduct”.
However, he said ASIC’s enforcement activity could be “delayed or affected” by the coronavirus crisis, as it allows some leeway for individuals and companies that may be “facing significant disruption”.
Nonetheless, Mr Crennan may well be gearing up for another round in its fight against Westpac on the contentious line between personal and general financial advice after the High Court granted the bank special leave to appeal last week.