ASIC investigations and prosecutions
Recently, our firm invited Anthony Lewis of the Victorian Bar to present a talk about ASIC investigations and Prosecutions. Anthony is a very experienced Barrister who has experience across a number of fields, but particularly in white collar and commercial crime. He runs many Jury trials and was very informative on what is, as he was the first to admit, a very dry topic.
To summarise Anthony’s talk, the ASIC powers to investigate arise mainly from Section 13 of the Australian Securities and investments commission Act 2001. The investigation power is often reduced to a file note which is a document that is always worth trying to obtain as part of the disclosure of the matter.
He discussed the compulsory examinations that are known as Section 19 examinations. He reminded everybody of the importance of very carefully looking at the Notice as it can be very informative about what type of investigation is occurring.
Section 19 examinations have some unusual features. It is necessary to claim privilege at the beginning of each answer to a question. The person being examined has to say ‘privilege’ before every answer. It is important to note that even where privilege is claimed, the answers can be admissible in certain proceedings such as tribunal hearing, banning hearings and hearings in relation to whether Directors should be disqualified from being able to serve as Company Directors.
There is no right not to answer questions in one of these interviews. It is very important to discuss with a client the issue of them being very careful about telling the truth and understanding the questions before they answer them.
There is also a power to compel production of documents under the Act. When documents are requested it is important to check what sub-heading they come under as that is, again, an important indicator as to how the matter may be proceeding.
It is always worth discussing with the Examiner or the other ASIC employees whether there is an outcome that can be achieved that will avoid a Court case. This may be an acceptance of a banning order or a disqualification order depending upon the circumstances.
ASIC tend not to use telephone intercepts or surveillance to the same degree as other agencies. However, there may be other agencies assisting them with a matter and information may be coming to the attention of ASIC which you would not normally expect.
ASIC prepare thorough briefs of evidence and have a very comprehensive document management procedure. The common offences that are charged by ASIC are:
- Breach of directors duties (section 184) (2);
- Inside of trading (section 104 3a);
- Market manipulation (1041 A);
- False accounting (section 1307).
Anthony’s experience is that there is often a very real advantage of committals in these matters as they help to focus everyone on the key areas and as to whether some suitable resolution can be reached.
As with most of this sort of white collar or corporate crime cases, the key is to get advice early and not to go into matters unprepared.