ASIC outlines enforcement efforts

In the second half of last year ASIC brought criminal proceedings against nine individuals on 76 charges, with four people imprisoned as a result and $12.7 million imposed in civil penalties.

ASIC also disqualified 28 directors and there were 72 instances of individuals being removed or restricted from providing financial services or credit.

This comes from 75 investigations opened by the regulatory body, 57 of which werecompleted.

ASIC said it resolved 30 corporate governance related outcomes between 1 July 2018 and 31 December 2018. There were 14 criminal and 17 civil corporate governance matters underway with no outcome as of the start of 2019.

During the period in question, ASIC also resolved 10 market integrity related cases.

Of key concern, ASIC won the Bank Bill Swap Rate case against Westpac in November - with the Federal Court ordering Westpac to pay $3.3 million for contravening the ASIC Act 2001 by its involvement in setting the ASX Bank Bill Swap Rate in 2010.

An independent report was ordered by the court, to review Westpac's current systems, policies and procedures. Findings must be reported back to ASIC with nine months.

ASIC commissioner Sean Hughes said the court found after a six week contested trial : "Westpac traded with the dominant purpose of manipulating the benchmark and in doing so acted unconscionably."

The finding indicated that between 6 April  2010 and 6 December  2010 Westpac traded with the purpose of influencing yields of traded prime bank bills and the setting of the Bank Bill Swap Rate in a way that was favourable to its rate set exposure.

Hughes said "the framework was really complex" because the swap rate is not a financial product clearly covered under the Corporations Act.

Court settlements were ordered against Commonwealth Bank , National Australia Bank  and ANZ on similar matters. Total civil penalties against these banks came to $25 million. Total community benefit payments were made of $55 million.

In the six months between 1 July 2018 and 31 December 2018, ASIC resolved 56 financial services related outcomes. However, as of January this year there were 15 criminal and 66 civil financial services related matters with no resolution.

ASIC appeared in the High Court to bring a case against APCHL, an entity of Prime Trust, which owed investors $550 million upon its collapse.

ASIC sought a $33 million payment and the High Court found in the regulator's favour.

Hughes explained: "Directors breached their duties by authorising amendment to the constitution of Prime Retirement and Aged Care trust which enabled $33 million to be paid out of fund assets without member approval."

In its update, ASIC said in 2019 misconduct involving AFS licensees would be looked at closely.

It said: "We are also focusing on responsible lending breaches, as well as the sale of inappropriate products to consumers, which can potentially cause them harm."

Read more: WestpacHigh CourtASIC ActASX Bank Bill Swap RateSean HughesAged CareANZAPCHLCommonwealth BankFederal CourtNational Australia BankPrime RetirementPrime Trust
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