I am pleased to appear before the Committee today. I am joined by Commissioners Kate O’Rourke, Alan Kirkland and Simone Constant. Deputy Chair Sarah Court is unable to be present today as she is on leave, as we notified the Committee Chair on 21 March 2024. Tim Mullaly, Executive Director of Enforcement and Compliance and Melissa Smith, Senior Executive Leader Enforcement and Compliance are here to assist me to address your questions about our enforcement work. We thank the Committee for giving us the opportunity to prepare and speak about our enforcement work. Also present today are Chief Executive Officer Warren Day; our General Counsel, Chris Savundra; Executive Director of Regulation and Supervision, Greg Yanco; Executive Director of Markets, Calissa Aldridge (joining us by video today); and Senior Executive Leader, Market Infrastructure, Ben Cohn-Urbach.
I would like to thank the Committee for engaging with matters of significance to ASIC. I note the Committee’s report on the ASX released just last week. We are looking closely at the recommendations, together with our Council of Financial Regulator colleagues.
Leadership changes
As you may be aware, I have announced some impending changes to ASIC’s leadership team. CEO Warren Day will move to take on an executive role with one of our key partner agencies, the Commonwealth Director of Public Prosecutions. Other senior leaders are retiring after many years at ASIC. These are all valued staff members and the Commission and I am very grateful for their many years of dedicated service.
ASIC is on a journey of growth and transformation. We continue to focus on ensuring we have the right people and structure in place to meet the challenges and opportunities that rapidly evolving national and global markets present – indeed our staff turnover figure for March was 9.07%, down from 14.86% a year ago and 13.10% in March 2022.
While it’s certainly personally sad for me and the other Commissioners to see colleagues move to other roles or other life stages, these changes are a natural part of change and growth. I and the other Commissioners are working together to support this growth. We have outstanding leaders throughout the organisation ready to step up, and no doubt outside the organisation, and this is the opportunity for exceptional leaders to drive the next phase of ASIC’s transformation. It gives me great optimism for ASIC’s future.
Culture and transformation
No doubt, organisational transformations and these other significant changes by their very nature cause disruption and prompt self-reflection. We have seen that reflected in analysis of our culture as well, and like any organisation, there is always room for culture improvement. And that is yet another area where change will occur over the next several years.
It is clear to me that the changes we are making are already yielding results. I hear this in feedback from a wide range of stakeholders and I see it in the improvements in timeliness and efficiency in our investigations, and in the dynamic work we’re doing across our broad regulatory and law reform remit.
Our enforcement record
But make no mistake, in the midst of change we have not taken our eye off the ball. ASIC is in court nearly every day of the year, and last year alone commenced 150 new investigations, aligned with the priorities we have set out, and supported by the new structure. In recent weeks ASIC has seen several firsts in our enforcement work, including our first finding of liability against a company for ‘greenwashing’, and our first infringement notice to the ASX for breaching pre-trade transparency rules. Our strong record on insider trading continues with a criminal prosecution last month resulting in a defendant being sentenced to a term of imprisonment for misleading share trading, with actual time to serve.
During the course of last week and this week, ASIC has been or will be in court for over 20 different matters, fighting for the interests of Australians. From the committal hearing for Mr Renato De Maria for the alleged misuse of approximately $35 million worth of client funds, to the sentencing of Henry Heng for his failures as a director, a hearing in a case involving an application to the Federal Court by Clive Palmer against ASIC and the CDPP, and our civil penalty trial against Cigno and BSF for allegedly providing unlicensed credit and charging prohibited fees. Across the country, in lower courts and in superior courts, ASIC is active in holding to account those that we allege have broken the law.
We have spoken many times in this forum about ASIC’s enforcement. We’ve been pleased to assist the Committee with your questions in the submission we provided last week, and we are happy to answer your questions. If there are any matters we can’t discuss openly today due to the sensitivities, we’ll be pleased to provide more information at an in-camera session.
Our submission, which I believe has been published by the Committee, demonstrates that we have been, and continue to be, an active and effective litigator. We pursue court-based outcomes and substantial penalties to hold those who contravene the law to account and to deter similar misconduct occurring in the future. In the last financial year, our enforcement work resulted in 32 individuals being charged by the CDPP in criminal proceedings and 35 criminal convictions. We ran 26 civil proceedings, resulting in over $185 million in civil penalties imposed by the courts. We removed or restricted 77 individuals and companies from providing financial services and 28 from providing credit, and our work resulted in 32 individuals being disqualified from directing companies.
And we are putting our new design and distribution obligation powers to good use. Many interim stop orders have been made, but last week we made our first final stop order since the design and distribution obligation regime was introduced. This final stop order permanently prevents Urban Rampage stores across the NT and WA selling goods via deferred debt arrangements which receive priority payment through Centrepay. The Urban Rampage stores have significant First Nations customer bases and we found that these credit arrangements were unsuitable for consumers in the target market, because they were unlikely to be consistent with those consumers’ financial situation, and placed them at risk of financial hardship.
I can this morning also share news with the Committee that we have commenced proceedings in the Federal Court against Magnis Energy Technologies Limited, alleging the company failed to disclose the true position of its US-based flagship lithium-ion battery manufacturing facility. Continuous disclosure obligations are critical to the fair and efficient functioning of Australia’s financial markets and directors must ensure their companies comply with the continuous disclosure regime.
Clean and transparent markets are critical to investment into Australia. Where we see clear evidence that companies and directors are failing to provide material information to the market and investors, we will investigate and act.
In this case, we allege that Magnis and its Executive Chairman, Frank Poullas, failed on both counts, leaving the market materially uninformed and investors unaware that Magnis’s flagship battery factory was in a parlous state, both financially and operationally.
