This website uses cookies to ensure you get the best experience on our website. Learn more

Law Notes Securities and Financial Services Regulation Notes

Asic Investigation And Enforcement Powers Notes

Updated Asic Investigation And Enforcement Powers Notes

Securities and Financial Services Regulation Notes

Securities and Financial Services Regulation

Approximately 294 pages

A 204 page bible of detailed cases and materials summaries, super summaries ideal for open book exam use and a rights/remedies map.

Please be aware that the FOFA legislation has gone through substantial revisions and continues to be modified - some of the material contained in these documents regarding FOFA may be out of date.

Structure of the cases and materials summaries:
Class 1 - Introduction
Class 2 - What is 'regulation'
Class 3-6: How are we regulating (Generally, Disclosure to Re...

The following is a more accessible plain text extract of the PDF sample above, taken from our Securities and Financial Services Regulation Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

ASIC Investigation and Enforcement Powers

The Basics

ASIC’s Information Gathering Powers

  • ASIC collects information through both its general intelligence (complaints, economic research) and four other ways whereby persons are required to provide it with information:

    • Lodgment by regulated entities and others of reports or documents

    • ASICs exercise of statutory powers requiring provision of information/books as part of ‘surveillance’

    • The hearings power

    • The exercise of its powers icw investigations following the commencement of proceedings

  • [Confidentiality] ASIC is required to take all reasonable measures to protect information that is given to it in confidence or icw the performance of its functions under the corporations legislation from unauthorised use (s 127(1)

  • ASIC is also required to act consistently with the principles of natural justice and give an examinee an opportunity to be heard before making the confidential record available before public hearings.

    • There may be exceptional situations where the principle doesn’t require this – e.g. if it would frustrate an investigation

Mandatory reporting

  • This includes requirements for AU market license and CS facility holders as well as duties on certain people such as trustees/debenture holders

  • More relevantly, the holder of an AFS license is required to notify ASIC of certain matters under s 912D and provide information to ASIC about its ARs under s 916F

    • AFSL are also s.t. special financial reporting requirements in Pt 7.8 Div 6 and are required by the conditions placed on its AFSL to notify ASIC of matters like a material adverse change in its financial position (reg 7.6.04)

General information gathering powers
  • Generally speaking a person is required to produce a relevant document even if it might incriminate them or make them liable to a penalty – but they aren’t required to hand over a document to which LPP applies

  • ASIC’s information gathering powers include:

    • ASICA s 29: A general power to inspect books kept in accordance with the corporations legislation

      • This includes their financial records under s 286 CA

    • ASICA ss 30, 30A, 31, 32A and 33 confer power on ASIC to issue written notice requiring the production of books

      • These powers can only be exercised ftpo specified in the ASICA s 28 which include the performance or exercise of any of ASIC”s functions or powers ftpo ensuring compliance with the corporations legislation, in relation to a suspected contravention of the relevant law

      • This includes obtaining books and information for possible contempt proceedings against a person ASIC suspects of having contravened an order under s 1323 CA

      • These powers are reinforced by ss 35, 36, 36A to apply for and execute a warrant to search and take possession of the relevant books

      • Such a notice of production may require a company to undertake investigation such as making enquiries of officers, employees and agents – the mere fact that the notice is inconvenient to provide an answer to and that it will require considerable resources and time will be insufficient to have it set aside (Melbourne Home of Ford v TPC)

      • Where documents under the scope of a ASICA Pt 3 Div 3 notice it may be possible to mask that information

  • [Power to give notices]

    • ASIC’s power to require production of books under notice include:

      • S 30(1): Books relating to the affairs of a BC

      • S 30(2): Books relating to the operation of an RMIS

      • S 31: Books relating to a range of specified matters to do with financial products – like business or affairs of a FM, dealing in financial products, advice given, analysis/report issued/published about FPs etc.

        • The range of persons to whom the notice can be given include FM and CS facility operators and their board members, persons who cary on an FSB, their representative and nominees

      • S 32A applies ftpo consumer protection provisions in Pt 2 Div 2 ASICA and covers books relating to FS and their supply

    • s 33: ASIC’s general power to require the production of books relating to these matters form anyone in possession of them.

      • This encompasses people with no involvement in the relevant investigation – the only characteristic for validity is if the document has the necessary characteristic (e.g. relates to the affairs of the BC) (ASC v Zarro)

      • ‘Possession’ includes both custody and control (s 86) and includes the legal entitlement to require them to be produced, or those held by a person’s solicitor (ASC V Dalleagles)

  • [Form and purpose of the notice]

    • See 72: Formal requirements, failure to substantially comply can invalidate

    • [Ulterior purpose]

      • IF a person to whom a Pt 3 Div 3 notice is directed can demonstrate it was issued for an ulterior purpose like coercion or intimidation it may be set aside (ASC v Lucas) but the onus of doing this rests on the recipient of the notice who seeks to challenge it (Spargos Mining)

      • It isn't improper for ASIC to use its notice powers to obtain information following the commencement of civil penalty proceedings even where the use of those powers might put it in a different position from other litigants

  • [Reasonable excuse for non-compliance]

    • The recipient of a notice issued under Pt 3 Div 3 may not refuse or fail to comply with a notice unless they have a reasonable excuse (else they commit an offence – s 63(1))

      • A reasonable excuse

        • Can include a sufficient practical difficulty in complying on time (CAC v Yuill)

        • Is not provided by a contractual duty of confidentiality (von Doussa v Owens)

        • Is not provided by the fact that the relevant book tends to incriminate the person or make them liable to a penalty (s 68(1))

  • [Legal Professional privilege]

    • [Scope of privilege] At general law a client may assert LPP to resist disclosure of a communication between a legal practitioner and his/her client which is confidential in character and which was created for the dominant purpose of the lawyer giving, or the client obtaining, legal advice or for use in existing litigation or...

Buy the full version of these notes or essay plans and more in our Securities and Financial Services Regulation Notes.