ASIC Investigations

Law and order takes a fundamental role in a civilized world. It is an essential prerequisite to progress and development, as it provides an enabling environment for the economy and businesses to grow and prosper.

In an economically healthy and robust society, capitalists, investors, consumers, and the public depend on official authorities and regulatory bodies to protect their respective rights and privileges. In Australia, corporations, traders, and markets — including financial services (e.g., banks, credit and lending institutions) — are regulated by the Australian Securities and Investments Commission (ASIC). It also conducts investigations and enforcement actions whenever there are cases where applicable laws are breached.

As an individual or even as part of a corporate entity or any other organization, you can rely on ASIC to provide the necessary information, guidance, and other services that would help you effectively and efficiently handle, govern, and manage your business concerns and endeavors. Inversely, other individuals and institutions can rely on ASIC to protect their rights against abuse and fraud, which you might deliberately or even inadvertently inflict or cause against other individuals and organizations.

Conducting business in Australia

If you want to do business in Australia, you can check all the relevant information you need with ASIC. It provides you, as a potential investor and capitalist, step-by-step guides on how to set up a business — from registration to the extreme case of dissolution and liquidation in the event your business fails and goes bankrupt. All matters pertaining to your business, such as the operational, administrative, and governance procedures, are guided by ASIC, and you can check all of these on their website. This integral role and mandate carried out and administered by ASIC are set under the Australian Securities and Investments Act of 2001 (ASIC Act) and the Corporations Act of 2001 (Corporations Act).

Good corporate governance – avoiding ASIC Investigations

Understandably, if you put up a business or establish a company or corporation, your primary objective is to operate profitably and sustainably. However, while profits and staying in the business take center stage among your goals, you also have to pay adequate attention to ensuring that it is compliant with the policies, regulations, and rules imposed and directed by your host country.
While corporations are governed by their own rules and policies, these are aligned whenever and wherever applicable, with the laws and national policies of the country that has jurisdiction over them. If you are connected to a corporation, as a Director or one of its authorized officials, you are not only regarded as a proponent; you are also expected to make sound decisions in accordance with good governance practices for your business. This would enable your business to continue to exist and operate legally.

You will be held responsible for misconduct, any breach of the law, or any irregularity that may compromise the integrity of your organization, as well as put the welfare, investments, and money of other stakeholders, including your customers and employees, at risk.

ASIC Investigations

There are situations when ASIC may be alerted to conduct its investigations and consequently, enforce certain actions. Your company is obliged to submit certain requirements, which must contain substantial and appropriate disclosure of pertinent information.

Once an ASIC authority discovers irregularity in your submitted reports, he or she may create a report or give a recommendation that may require further investigation of your company and anyone who may be involved in the suspected misconduct. Your company may also be added to the red flagged companies and individuals who need monitoring and surveillance due to a suspicion of fraud. Whistle blowers and private complainants may initiate an investigation against you. Lastly, ASIC may conduct ASIC investigations of suspected misconduct or breaches of certain laws based on referrals from other relevant agencies.

The investigations conducted by ASIC are categorized into four groups or teams based on the risk areas where misconduct may arise or be committed. Depending on the severity and seriousness of the misconduct, the results are classified based on enforcement methods, such as criminal, civil, or administrative cases. It may also resort in the conduct of enforceable undertakings or negotiated outcomes.

Market integrity maintains that all stakeholders are treated fairly. Insider trading violates this code, as people who are greedy would take advantage of ‘insider information,’ which may come from a person, entity, or establishment for which they have fiduciary duty, the duty to provide the highest standard of care and uses that make investment decisions favorable to them.
If you are guilty of this illegal activity, you may be accountable for it and may face criminal charges.

Some directors commit unethical practices that are contrary to good governance principles, and which result in reputational risks to the company. While such allegations of misconduct may be difficult to prove, as you can invoke that you have exerted all efforts to perform your duty of care, loyalty, and obedience to the company, you may still need the services of a good lawyer to face the charges that may be filed against you.

Companies that provide financial services may offer products using misleading and incorrect or unsubstantial information. Such deceptive actions may be prosecuted and can lead to penalties such as fines and imprisonment, depending on the gravity or materiality of the offence.

Some small businesses also use unfair practices, such as putting undue pressure on prospective customers, the use of deceptive contracts, and other misleading information — such as offering products ‘on sale’ when they are really not available on site, or using false or bait advertising and other similar tricks to gain illegal profit.

The Australian government provides adequate support services, facilities, and personnel to enforce applicable laws that secure the integrity of doing business in the country. However, there are still people who choose to obtain profit through practices that may be considered illegal.

If you find yourself involved in ASIC investigations, it is advisable that you seek professional help. A competent legal adviser, lawyer, or solicitor will be able to give you a clear picture of your situation and what legal options and remedies are available.

For more information on ASIC Investigations and how you can obtain legal help, contact our team today.

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