ASIC, Compliance

ASIC clarifies litigation strategy

The Australian Securities and Investments Commission (ASIC) has stipulated how its new litigation policy approach will be applied to its ongoing enforcement activities.

Speaking at the ASIC Annual Forum 2019 in Sydney today, chair James Shipton emphasised the corporate regulator’s adoption of the “Why not litigate?” method does not mean ASIC regards litigation as its first available course of compliance action nor does it mean litigation will be undertaken for every corporate breach under its jurisdiction.

“’Why not litigate?’ is our own strategic construct and the aim of this is to deter future misconduct and address community expectations that wrongdoing be punished and publicly denounced through the courts,” Shipton said.

He added the process meant litigation would only be used in situations where ASIC had determined breaches of the law are more than likely to happen and it would be in the public’s interest to litigate as determined by the facts of the case involved.

ASIC would then ask itself “Why not litigate?” in these types of circumstances, he said.

“Our enforcement work has a core focus on deterrence, public denunciation and punishment of wrongdoing by way of litigation,” he noted.

He also used his speech to comment on the regulator’s new supervisory approach resulting from the failures of the financial services sector highlighted by recent events.

“This approach is all about promoting permanent cultural and behavioural changes in institutions individually and across the financial services industry more broadly,” he said.

In addition, the new supervisory approach will allow ASIC to prevent misconduct and breaches of the law through early identification of causal factors such as cultural, organisational and management failings, he said.

“Supervision also adds a focus beyond current known non-compliance to look at things that create significant risk of future breaches. Importantly, we are increasingly using advanced data and market analytics in this work to detect misconduct early,” he noted.

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