Boardroom briefings - Boardtrac

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Boardroom briefings Responding to an ASIC investigation

by John Steven, Bart Oude-Vrielink, Ross Freeman and James Beaton MinterEllison

As Australia's corporate regulator, ASIC has broad powers to investigate potential breaches of Australia's corporations law. Responding to an ASIC investigation can be time consuming, distracting and costly. But your response to an ASIC investigation needs to be well managed to minimise risk. This briefing provides guidance on ASIC's powers and how to respond to an ASIC investigation.

Introduction As Australia's corporate regulator, ASIC aims to ensure that Australia's financial markets are fair and transparent, and supported by informed investors and consumers. They do this in part by monitoring compliance with the law, undertaking investigations and taking enforcement action when necessary. How you respond to an ASIC investigation may have a profound impact on the outcome of that investigation.

There is much to consider when confronted with an ASIC investigation, including the following:

• how and to what extent you co-operate with ASIC, consistent with your desire to maintain your reputation for honesty and integrity;

• how and to what extent you exercise your statutory rights;

• how you undertake internal investigations to 'uncover the truth' whilst preserving the benefit of your statutory rights;

• how you interact with your insurers (D&O and others) to maintain the benefit of your cover whilst retaining control over the process;

• how you balance your legal rights and responsibilities with your desire to be open and transparent to the market and your stakeholders;

• how you provide support for your employees and board members consistent with those responsibilities;

• how you deal with any diverging interests that might arise within your organisation.

Much turns on the old saying – 'begin with the end in mind'. Whilst it is not always possible to predict how an ASIC investigation will unfold, you should aim to have a comprehensive understanding of what occurred and its likely implications as early as possible so that proper judgments can be made as to

how to proceed in response to ASIC's enquiries. Often, organisations move slowly in the initial stages of an investigation and can adopt positions or responses they may regret when they learn more down the track.

A key part of understanding how to respond to an ASIC investigation is understanding how ASIC undertakes its investigatory powers and the general principles that should guide you in responding to that process. It is that analysis that this guide will focus on.

ASIC and its investigative powers: an overview Role of ASIC

ASIC has a range of compulsory information gathering powers to assist it to undertake investigations. These include powers to require you to:

• provide ASIC with documents and information; and

• attend an examination to answer questions and/or provide reasonable assistance.

ASIC regularly uses these powers because:

• the areas regulated by ASIC are often complex (for example financial transactions are largely document-based, often large scale and in some cases there are large numbers of entities and individuals involved);

• many entities and individuals will not provide documents to ASIC on a voluntary basis because, amongst other things:

o they want the statutory protection from a potential breach of confidentiality or other liability that arises when a compulsory request from ASIC is complied with;

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o they wish to retain legal professional privilege over documents or information; and

o they want to maintain statutory privilege against self incrimination and penalty privilege.

ASIC also has powers to apply for and execute search warrants to obtain documents which it believes have not been produced or are at risk of destruction.

ASIC acknowledges that it must use its powers for a 'proper purpose'. This means that the use of a power must be designed to advance its inquiry – ASIC recognises that it must use these powers responsibly and that it is important that there are safeguards in place to ensure these powers are not misused.

ASIC uses compulsory information gathering powers in two broad areas of regulatory activity:

• surveillance; and

• investigations of suspected breaches of the law.

Surveillance

When ASIC talks of 'surveillance', it is referring to activities that involve gathering and analysing information on a particular entity to ensure ongoing compliance with the law. Surveillance can be undertaken on companies, partnerships, licensed or unlicensed entities and individuals, and also on disclosure documents. Surveillance can be initiated either:

• on a reactive basis (for example in response to a complaint or industry intelligence); or

• proactively – to examine the industry environment or test a concern, issue or practice.

An example of the 'reactive basis' may be a response by ASIC to information revealed in the media, a referral from ASX or through complaints from other market participants. Examples of a 'proactive' surveillance may be where, for example, there may be community debate on how a category of market participant may undertake part of their business activities (eg confidential market soundings by investment bankers during a capital raising) – ASIC may undertake surveillance activities to determine what a particular industry practice is.

ASIC regards surveillance as particularly useful because it allows ASIC to engage with industry (often on a face to face basis) and to actively monitor their activities, so that ASIC has a real presence in the market. This has both an information gathering benefit and also a deterrence benefit, in the same way that police seen in the street can have a deterrent effect on crime in that area. ASIC believes that both the prospect and the act of surveillance can influence and

bring about changes in individual behaviour and on an industry wide basis.

Another example of active surveillance by ASIC is the monitoring of companies that exhibit signs of financial distress. ASIC has a team that looks for evidence of potential insolvent situations and will make inquiries, if they think there is a potential for insolvent trading.

Surveillance usually involves direct interaction with an individual or entity. It also involves ASIC exercising its information gathering powers to inspect books and records, or to compel the production of documents or the disclosure of information.

ASIC's surveillance programs cover a number of key strategic areas including:

• corporate financial statements;

• prospectuses and takeovers documents post lodgement vetting;

• responsible entities of registered managed investment schemes;

• abuse of corporate requirements (disqualified officers, persistent offenders and insolvent companies);

• statutory records compliance;

• auditors' and liquidators' activities;

• working with ASX and other market operators to investigate serious market irregularities.

It is not a precondition to an ASIC surveillance inspection that ASIC has any reason to suspect a breach of the law.

Investigations of suspected breaches of the law

ASIC receives thousands of allegations of misconduct every year and also becomes aware of misconduct through other sources such as its own surveillance activities. If ASIC considers that there is a suspected contravention of the law that may warrant deterrence action, the matter is referred to an ASIC enforcement team. These teams conduct inquiries, formal investigations and deterrence actions in response to perceived misconduct.

When a matter is referred to an ASIC enforcement team, ASIC may commence a formal investigation to find out whether there is evidence that a contravention of the law has occurred and if so, to gather that evidence to use in appropriate enforcement action. For example, this may involve civil action, a brief to the Commonwealth Director of Public Prosecution to consider whether to lay criminal charges, or a brief to an ASIC delegate to consider whether to conduct an administrative hearing.

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In undertaking formal investigations, ASIC uses its compulsory information gathering powers to collect documents and information. A formal investigation also allows ASIC to use its power to conduct compulsory examinations of people who may have information that can assist in the ASIC investigation. During a formal investigation, ASIC gathers information from people and entities that are the subject of its investigation, and also from people and entities who are not suspected of any wrong doing, but may have information that is relevant to the investigation. There will be many occasions where people are the subject of ASIC's information gathering inquiries or investigations, where they are not in any way suspected of having carried out any wrong doing. Even in those situations, it is important that the guidance provided in this briefing is considered carefully, as ASIC investigations can take a direction midstream that was never expected, by ASIC or by others involved in the information gathering exercise.

The difference between surveillance and an investigation

ASIC uses a range of compulsory information gathering powers and types of inquiries to obtain the required information. The difference between the two types of inquiries relates to the range of information gathering powers ASIC is able to use, and the purpose for which the information is gathered.

Formal investigations are undertaken by ASIC when it suspects there has been a contravention of the law relating to its regulatory responsibilities. Generally speaking, only formal investigations allow for the use by ASIC of all its powers to conduct an examination and to request reasonable assistance. After a formal investigation begins, ASIC can also apply for and obtain search warrants when the circumstances require it. ASIC seeks to find out whether there is evidence that a suspected contravention has occurred. If that evidence exists, ASIC will then consider what action (if any) should be taken.

In a surveillance inquiry, ASIC can only utilise its powers to inspect documents and compel the production of documents or the disclosure of information. Its purpose there is to test and ensure ongoing compliance with the law.

Sources of information to ASIC

Disclosures to ASIC

ASIC may become aware of possible misconduct in various ways. Sometimes, it is an 'after the event' act, such as the spectacular corporate collapse or other financial failure of an organisation. In other cases, ASIC may be alerted by complaints received (anonymously or otherwise) from shareholders, creditors or other members of the public or a referral

from another regulator such as ASX. ASIC also obtains information from investigative journalists reporting in the media (mainstream or online) or from information referred to it by a court as a result of litigation or a liquidator's examination.

ASIC conducts an extensive market intelligence and complaints management program to analyse information and external complaints about corporate activity and to identify matters appropriate for investigation and surveillance.

ASIC also has a number of statutory sources of information. For example, auditors, receivers, voluntary administrators, liquidators and trustees for debenture holders are all required to bring to ASIC's attention certain types of possible irregularities and then give ASIC investigators full access to, and facilities for inspecting and taking copies of, all relevant documentation. There are protections from defamation (qualified privilege) for such people. Such statutory reporting obligations override any secrecy or confidentiality arrangements between such people and the company.

Surveillances and investigations

ASIC actively uses its investigative powers. It has at any one time numerous active regulatory investigations underway where the production of documents, the disclosure of information and the examination of witnesses is a major part of their investigatory process.

MOUs and other statutory sources

ASIC has a number of arrangements, both statutory and pursuant to memoranda of understanding, under which ASIC sources information:

• ASX, ASX Settlement and ASX Clearing: A market licensee (eg ASX or Chi-X) or licensed clearing and settlement facility is required to assist ASIC and report matters to it.

• Australian Taxation Office: The ATO has extensive powers to gain access to books and otherwise obtain information. Some of this information may be relevant not only to possible revenue offences but also to breaches of the Corporations Act 2001 (Corporations Act). The ATO can release taxation information to an authorised law enforcement agency officer, including ASIC investigators but only upon being satisfied that the information is relevant to establishing whether a serious offence has been committed, or is relevant to making a proceeds of crime order. ASIC has also entered into an MOU with the ATO concerning the exchange of information.

• Australian Transaction Reports and Analysis Centre: AUSTRAC was established to assist in

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the detection of tax evasion and the various forms of money laundering. All stock brokers and other financial services licensees, investment banks and trust managers are obliged to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) including in relation to suspicious matter reporting to AUSTRAC. The AML/CTF Act does not prohibit disclosure of information relating to suspicious matters to ASIC.

• Other Australian regulatory authorities: There are various other bodies with powers to investigate or provide information on various aspects of corporate crime, including the National Crime Authority, Federal and State police forces, crime commissions and the Australian Bureau of Criminal Intelligence. Many of these bodies have formalised MOUs with ASIC.

• International information gathering: ASIC often obtains information from people located in foreign jurisdictions, through voluntary access, or by a compulsory process. ASIC has MOUs with a large number of foreign regulatory bodies and there is currently a great deal of cooperation between regulatory bodies around the world.

Confidentiality of complaints

Generally, ASIC will neither confirm nor deny the existence of an ongoing investigation or its sources unless it is in the public interest to make a positive statement. However, ASIC will announce the result of an investigation when it takes some action. ASIC regards its responsibility to inform the public of its activities as important, as it:

• promotes public confidence in ASIC's administration of the law – that is, there is transparency around what ASIC is doing about people who break the law; and

• promotes compliance with the law by informing the public about the standards ASIC expects and the consequences of failing to meet those standards.

Equally, ASIC understands that there are specific factors that may limit its ability to comment about investigations, including:

• legislative restrictions (certain material cannot be disclosed under the Australian Securities and Investment Commission Act 2001 (ASIC Act));

• the need to safeguard confidential or sensitive information (such as confidential information that may affect the price or the market for that product);

• the potential to jeopardise investigations through the untimely release of information;

• privacy legislation and guidelines;

• ensuring a persons' right to a fair trial is not prejudiced;

• the risk of defamation or other legal proceedings against complainants, ASIC offices or other entities;

• compliance with court orders not to disclose information in certain circumstances; and

• the need to use ASIC's resources efficiently – ASIC must allocate resources across a wide range of priorities and responsibilities.

In relation to particular complaints, ASIC will not disclose the source of complaints during an investigation, although it may become apparent from the questioning in an examination of a witness. Some people lodge complaints anonymously. How serious anonymous complaints are treated by ASIC will depend on the extent of the information provided and the compelling nature of that information. The fact that it is anonymous will not of itself result in a complaint being ignored but that risk is greater than with a complaint by an identified person with whom ASIC can engage.

Informal inquiries

Under ASIC's surveillance programs or in the early stage of an investigation, some ASIC investigators seek information though voluntary cooperation rather than by reliance on statutory powers. ASIC investigators, like any person, have the right to ask questions. ASIC may make phone inquiries or otherwise seek information for example by letter or email. At this informal stage, where investigators are not seeking to exercise their statutory coercive powers, they have no right to require the disclosure of information or to claim a right of inspection or interview.

If you receive a request from ASIC to provide voluntary disclosure, it is important you understand the nature of the inquiry, what the informal investigation relates to and how you might be implicated. Such questions are not treated suspiciously by ASIC. An experienced lawyer will well understand how such queries can be raised with the particular ASIC investigator without creating concerns or raising suspicions.

Where ASIC investigators are seeking information on an informal basis and without attempting to exercise their statutory powers, duties of confidentiality will remain. If you decide to give a voluntary interview (whether over the phone or in person), it is the normal practice of ASIC investigators to take extensive notes of that interview or even seek to record it (it is one reason the ASIC officer often has more than one person on the call or in the meeting). What may start out as a friendly meeting or phone call can quickly

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move into a detailed interview/interrogation, which can catch you unawares. Many people find it difficult to 'shut down' a phone call or meeting like this, even if it strays into areas of serious and genuine concern to them. The general principles set out below in relation to formal requests for the production of documents or the attending of a formal examination apply as much to informal inquiries as it does to the exercise by ASIC of its formal powers.

ASIC may also undertake more covert inquiries and use information gathered from that source in subsequent enforcement processes. For example, if a public company has an open line Q&A process following the release of its half yearly or full year financial statements, an ASIC officer may dial in (along with anyone else who chooses to do so) and listen carefully as analysts, disgruntled shareholders and other participants 'cross examine' the CEO and CFO on aspects of their financial reporting. When companies are facing difficult disclosure issues, preparation before undertaking such Q&A processes is always important.

Most commonly used information – gathering powers

ASIC's most commonly used powers to gather information include the powers to:

• require the production of documents;

• inspect documents;

• require disclosure of information;

• require people to attend an examination;

• compel assistance with an investigation; and

• apply for a search warrant.

We discuss in more detail some of these most commonly used information gathering powers below but, as a high level overview you should note the following:

• Power to require the production of documents: ASIC can require people to provide it with documents through the issue of a formal written notice (known as a section 33 notice). The notice describes the documents they are seeking and the time and place for the production of documents. Such requests can include electronic data and files. This is a power that ASIC frequently uses, particularly in its investigative work. In its surveillance work, it is more likely that ASIC would seek to have documents produced voluntarily.

• Power to inspect documents: ASIC has the power to inspect certain documents that must be kept under the Corporations Act (eg financial records). This inspection (unlike the powers to compel the production of documents) does not

require ASIC to issue a written notice. ASIC will usually make an appointment before conducting an inspection.

• Power to require disclosure of information: ASIC may exercise this power for any regulatory work but it most often does so when it is conducting a surveillance, making preliminary inquiries before the commencement of a formal investigation, or monitoring compliance with an enforceable undertaking. When ASIC uses this power, it usually asks people to provide written responses to questions.

• Power to require people to attend an examination: ASIC has power to require people to attend an examination and answer questions on oath or affirmation. ASIC can only use this power if it suspects or believes that people can provide information that is relevant to a formal investigation it is conducting (or intends to conduct). The threshold for commencing a formal investigation is that there is a reason to suspect a contravention of the law has occurred. To use this power, ASIC must issue a formal notice in writing, setting out the general nature of the matter it is investigating (or intends to investigate) (known as a section 19 notice).

• Power to compel assistance with an investigation: ASIC can compel people to give 'reasonable assistance' in connection with an investigation or a prosecution. This is usually undertaken through a formal written notice.

• Power to apply for search warrant: ASIC has the power to apply to a court for the issue of a warrant to search premises for books and records. This power is exercised where ASIC is concerned that information cannot be obtained through the usual formal exercise of powers or that information may be tampered with or destroyed.

The exercise of investigative powers by ASIC may be challenged in various ways – for instance, a person disputing a notice may choose not to comply with it thereby requiring ASIC to seek appropriate remedies. A person may seek an interlocutory injunction in the Federal Court to prevent ASIC from further acting, pending judicial review in the Federal Court of ASIC's proposed actions. The courts are usually reluctant to interfere in ongoing ASIC investigations. You will also appreciate that any such public action highlights to the public both the investigation and your involvement in that investigation. Usually, a better course is to seek to negotiate with ASIC the nature of their requirements, as set out below.

We will now consider in more detail issues relevant to some of these information gathering powers of ASIC.

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Production of books and records General approach

ASIC has broad powers to require a person to provide it with certain documents: section 33 ASIC Act.

Before using a power to require production of documents, ASIC considers whether in the circumstances it is more appropriate to use other methods to obtain the documents, including requesting that they are provided voluntarily.

When ASIC requires the production of documents it must issue the notice in writing. The notice describes the documents ASIC is seeking and the time and place for the production of the documents. The time for production must be a reasonable time from the date of service of the notice, taking into account the documents required and the type of inquiry. ASIC believes that, in some cases, it may be appropriate to require documents to be provided immediately but ASIC usually provides sufficient time for the documents to be collated. The notice must state, in general terms, the basis on which ASIC requires production of the documents.

The power to require production of documents is a power ASIC frequently uses, particularly in its enforcement work. In its surveillance work, it is more likely that ASIC would request that documents be produced voluntarily.

Approach to compliance with a notice

It is important that a disciplined approach be adopted in relation to responding to ASIC's notices for production of books and records. It is not the simple collating task many believe/assume it is. The overriding principle is to provide to ASIC all documents covered by the notice in the timeframe required by ASIC. However, there are a number of guiding principles you should bear in mind in doing that.

Principle 1: Respond honestly

ASIC's notice exercising its power to require you to produce documents also sets out your rights and responsibilities including:

• a requirement that you produce the original documents in your possession to ASIC at the specified time and date (although in some cases copies may be requested);

• a requirement that you produce the specified documents irrespective of whether they might tend to incriminate you or make you liable to penalty; and

• a right to refuse to disclose documents that are covered by a valid claim of legal professional privilege (if you claim legal professional privilege,

you must be able to explain why this privilege will apply to the information).

These obligations are real. You (and your advisers) should ensure that a comprehensive search is undertaken so that documents do not turn up down the track which could embarrass you or lead to an allegation that you did not comply fully with your obligations under the notice. This may involve extensive IT searches that need to be properly co-ordinated.

Failure to comply with a valid notice without reasonable cause is an offence.

Principle 2: Negotiate more time for production of the documents, if necessary

ASIC must provide a reasonable time for compliance with the notice, taking into account the documents required and the type of inquiry. ASIC claims that, when it uses a power to require production of documents, it will often seek to limit the compliance burden by:

• where appropriate, consulting with the recipient, before issuing the notice, on the scope of the request in terms of the description of the documents, the amount of time it will take to produce the documents and a convenient location for the production of the documents;

• only requiring documents that ASIC believes are needed for the surveillance or investigation;

• providing a reasonable time for complying with the notice; and

• considering any alternatives to issuing a notice, such as obtaining the documents or information voluntarily.

If, on reading the notice, you believe that there is insufficient time to identify and collate the documentation requested under the notice, you should directly or through your advisers make contact immediately with the ASIC investigator to ask for an extension of time. This is usually granted if the request is reasonable and not seen as a delaying tactic. If there is 'push back', it is usually along the lines of 'send us what you can by the required date and send any further documents identified as soon as you can after that'. If there is 'push back', it is advisable to confirm the request in writing, together with an explanation why the timeframe given for compliance with the notice is unreasonable. At the least, this will put on the record your request and the reason for the request. If there is any subsequent debate/argument about the timing of compliance, your concerns are on the record and the dispute can be elevated to the appropriate person within ASIC.

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Principle 3: Take a copy of what you provide to ASIC

You should always retain an exact copy of what it provided to ASIC. This should be kept, separate from the much larger initial collection of documents from which you identified those for production to ASIC. Some people have been known to send the documents off to ASIC, without keeping an accurate (or even any) record of what has been provided. This is not a good practice, particularly as ASIC investigations can continue for many months, in some cases years. There may also be subsequent notices served on you and it is important to know what has been provided previously so you don't need to replicate disclosure (this approach of not sending what has previously been sent should be confirmed with ASIC before responding – each notice has its own independent authority).

Principle 4: Don't rely on having to ask ASIC for copies

ASIC notices usually require the production of original documents. As indicated above, it is important that a copy of whatever is provided is kept as a permanent record of what has been given to ASIC. If you require the documents for the day to day activities of your business, you will need copies for that reason also. ASIC may in some cases allow copies of documents to be made, if you have overlooked doing so before complying with a notice. But ASIC has no obligation to do so.

Principle 5: Discuss with ASIC how it wants the documents delivered to the ASIC office

Production of documents under a formal ASIC notice is generally required to be done in person. However, as a matter of practice, arrangements can usually be made with the ASIC investigator for documents to be couriered or posted to the relevant ASIC office. You should contact the officer named in the notice and confirm whether the documents can be accepted by one of these alternative methods, before responding to the notice.

Principle 6: Negotiate the breadth of the notice with ASIC, if unreasonably broad

ASIC's notice may request the production of electronic data and files. Equally, documents described in the notice may only be available within your organisation in electronic form (eg emails). If the description of books and records in ASIC's notice is so broad as to require a massive online and physical search to be undertaken, it is usually appropriate to engage with ASIC as soon as practicable to seek to have the broad nature of the notice narrowed to render the notice more reasonable. ASIC recognises

that complying with a notice to produce documents can be intrusive and burdensome. It states that it will be prepared to limit the compliance burden by 'only requiring documents that we believe are needed for the surveillance or investigation'. This provides an opportunity for you to seek to narrow broadly drafted requests to a more reasonable form of description, thereby allowing a more reasonable search to be undertaken. This may include agreeing directly with ASIC key words to be searched on your computer system to identify documents covered by the notice.

Principle 7: Read the notice carefully

ASIC issues thousands of these notices every year. ASIC personnel are well experienced in drafting them and know what they are looking for. Therefore, when you are preparing to respond to the notice, the first thing to do is to read the notice carefully. Identify which companies the notice refers to (sometimes it refers to the group; sometimes, just a single company). If ASIC wants to capture entire groups, it will say so. If it wants to cover specific companies, it will say so. If it wants to cover a single company, it will say so. Do not read more or less into the notice than what it itself says. Your task is to comply with the notice. For that purpose you should note that the definitions of the words 'books' and 'document' in the Corporations Act are defined extremely broadly. For example, the term 'document' includes:

• any paper or material on which there is writing or printing or on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them;

• a disc or other article from which sounds, images or messages are capable of being produced;

• a disc, tape or other article, or any material from which sounds, images or messages are capacity of being reproduced with or without the aid of any other article or device.

While a notice authorises ASIC to require the production of specified information or specified books, books that are required to be maintained by law are automatically included under a notice by operation of law, and the notice need not specifically state those books must be produced. The degree of specificity in the notice must be sufficient to identify, with reasonable clarity, what is required to be produced. What the court would consider 'reasonable' will depend on the circumstances in which the notice is issues.

Principle 8: Don't reach cavalier decisions

Usually, there will be a number of documents that clearly fall within the notice and many documents that clearly fall outside the notice. There is often a number

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of documents that may or may not fall within the notice at first glance, depending on how the notice is interpreted. Don't make this judgment on your own. Have another experienced person second guess you on the judgments you form on these documents as to what falls within and not within the notice. No-one has perfect knowledge. Do not make key judgments on your own. The ramifications are serious if a wrong judgment is made so it is important that a proper process is undertaken to support that judgment. A second set of eyes is an important part of that process.

Principle 9: Do not waive legal professional privilege

ASIC's requirement that a person produce documents overrides any duty of confidentiality they may have. The ASIC Act provides statutory protection in these circumstances. However, documents may be protected by legal professional privilege. ASIC has accepted that you are not required to produce to ASIC documents that are protected by legal professional privilege. On some occasions, you may take the view at the outset of the investigation that handing over those documents may show you in a good light and may somehow 'protect' you from further investigation. Careful thought should be given as to whether this is the case (often, it is shown to be ill advised). ASIC investigations can take on new lines of inquiry midstream, which aren't anticipated at the outset of the investigation. As a general rule, it is advisable to claim legal professional privilege where it is exists and not provide such documents. Of course, such a general rule needs to be considered and applied in the context of each case.

Principle 10: Ensure no documents are destroyed

Care should be taken to ensure you do not destroy documents that may be relevant to an ASIC investigation. This can happen inadvertently so your people need to be warned of the risks. For example, some states of Australia have legislation that creates a criminal offence of destroying documents that are, or are reasonably likely to be, required as evidence in existing or potential legal proceedings.

Separately under some state legislation, a court may make orders it considers necessary to correct unfairness to a party as a result of the unavailability of a document. A document is considered unavailable when it is no longer in the possession of a party to the proceedings or it has been rendered illegible.

You need to advise your people on the implications of this in the context of your organisation and the circumstances of the investigation. For example, some organisations have IT systems that delete emails automatically after a set period or their default

settings in their software do it without them realising (eg calendar appointments).

Principle 11: Call in experienced help to respond to notices when appropriate

On its face, a notice may seem straight forward but you should always consider whether it is appropriate to get assistance from a lawyer experienced in dealing with ASIC and such notices. They can offer insights into what ASIC may be thinking and how you may respond to negotiations and compliance.

Examination of witnesses ASIC's powers

The ASIC Act grants ASIC power to require a person to:

• give to ASIC all reasonable assistance in connection with an investigation (section 19(2)(a) ASIC Act); and

• appear before a specified member or staff member for examination on oath and to answer questions: section 19(2)(b).

ASIC may only exercise these powers if:

• it has reasonable grounds for suspecting or believing that the person can give information relevant to a matter which is being or is to be investigated under Division 1; and

• it has served on the person a Notice that complies with the ASIC Regulations.

ASIC may also serve a section 19 Notice on persons who are not defendants in a proceeding which has already commenced, for the purpose of obtaining further information to assist ASIC in the proceeding.

Form of section 19 Notices

The notice must:

• specify the ASIC member or staff member (the inspector) who will be exercising the power;

• state the general nature of the matter being investigated; and

• set out the rights to legal representation and against self-incrimination.

The statement as to the nature of the investigation may very well be the only information that the recipient has about the inquiries which may be made by ASIC. The recipient is not entitled to a further indication of the scope of the investigation, whether pursuant to the Freedom of Information Act 1982 or otherwise.

The notice need not go into detail about the nature of the investigation, which makes it difficult for the examinee to query the relevance of the inspector's

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questions at the examination. However, the notice should give the recipient some hint as to the nature of the matter being investigated, including, where appropriate, a reference to a statutory provision.

Mechanics of the examination

The examination

The examination takes place in private before the ASIC inspector. The following people may also attend:

• another member of ASIC;

• an approved ASIC staff member;

• the examinee's lawyer; and

• other persons permitted by the inspector (for

example, the person taking the transcript).

The examination is an informal proceeding, and the rules of natural justice have limited application. The rights of the examinee's lawyer are restricted to addressing the inspector and examining the examinee on the matters raised by the inspector. Those rights may be curtailed if used to obstruct the examination.

At the commencement of the examination the ASIC inspector will provide general information along the following lines.

This is an examination under section 19 of the ASIC Act. My name is [ASIC officer] and I'm a staff member of the Australian Securities & Investments Commission. The date is [date] and the time is approximately [time].

The examination is conducted at the premises of ASIC at [address], following the giving of a written notice to [examinee] under section 19 of the ASIC Act. A copy of the notice dated [date], signed by [ASIC officer] and [ASIC officer], and bears ASIC barcode [code], which was served on you disclosed that this examination relates to an investigation commenced under section [#] of the ASIC Act into [detail of the investigation]. I'll just show you a copy of that notice. Is that a copy of the notice that you received from us? There is a letter, but behind the letter will be the notice itself.

…

[ASIC officer] and [ASIC officer] are inspectors for the purpose of conducting this examination. We are staff members of ASIC. [ASIC officer] and I have a delegation granted to us by ASIC under section 102 of the ASIC Act. [Examinee] would you please provide your full name and address?

…

And you are represented by a lawyer today. [Lawyer], would you state your full name and the firm you represent.

…

Do you or any other member of your firm act for any other person in this matter?

…

I also direct that this examination be recorded, and for this purpose [recorders name], a representative of [recording service], will be permitted to be present. A record will be made of the examination, and it will be put into writing. When it is put into writing you may make a written request for a copy of the transcript and it will be provided to you free of charge subject to any conditions that either I or [ASIC officer] may impose. When it is put into writing I will direct you in writing to read and sign it.

Relevant questions and duty to answer

The requirement to answer all questions asked by the examiner overrides any contractual or professional duty of confidentiality except legal professional privilege.

However, only questions relevant to the matter under investigation are required to be answered by the examinee.

The ambit of the inspector's questioning powers is broad. Because the examination is called on the reasonable suspicions of the inspector, the inspector may deal with those suspicions. The examinee may be questioned on matters of hearsay, opinion, the identity of persons or sources of information, as well as his or her knowledge of the matter under investigation.

In the absence of a reasonable excuse, the examinee must answer to the best of their knowledge and belief all relevant questions. The obligation to answer is strictly interpreted and any attempt to frustrate the inspector by blocking or stalling will be taken as non-compliance or obstruction for which ASIC may take enforcement action.

At the commencement of the examination the ASIC inspector will provide further general information relating to this along the following lines.

[Examinee], you must answer all questions put to you by me or [ASIC officer] that are relevant to a matter ASIC is investigating or is intending to investigate.

Privileges and immunity

Self-incrimination and penalty privilege

It is not a reasonable excuse for a person to refuse to give information, sign a record or produce a book in accordance with a requirement to do so on the basis

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that to do so might tend to incriminate the person or make them liable to a penalty.

Although the examinee cannot refuse to answer a question, if he or she claims privilege over the statement it may prevent the information from being admitted in evidence at subsequent criminal or civil proceedings. The common law privileges against self-incrimination and penalty privilege are abrogated by this provision.

At the commencement of the examination the ASIC inspector will provide general information relating to this along the following lines.

With respect to LPP, legal professional privilege, ASIC accepts that a valid claim of legal professional privilege is a reasonable excuse for not answering a question. Accordingly, you are not obliged to answer a question to the extent that the answer would disclose information that is covered by a valid claim of legal professional privilege. A claim of legal professional privilege may only be made by or on behalf of the holder of that privilege.

A person claiming legal professional privilege must establish that the privilege exists. If you claim that an answer to a question will disclose information that is covered by a valid claim of legal professional privilege, it will be necessary for you to provide to us sufficient information to allow us to make an informed decision about whether the claim for privilege can be supported.

With respect to self incrimination and exposure to a penalty, section 68 of the ASIC Act provides that if a proper claim for privilege is made before making a statement at an examination, the statement cannot be admitted against you in subsequent criminal proceedings or proceedings to impose a penalty other than in proceedings in respect of the falsity of the statement itself. However, section 68 does not apply to certain proceedings for the imposition of a non-monetary penalty. Those proceedings are specified in section 1349 of the Corporations Act. Examples of those proceedings include court or administrative proceedings to ban a person from managing a corporation or from providing financial services.

If you wish to claim the benefit of section 68 of the ASIC Act for an answer to a question that might tend to incriminate you or expose you to a penalty, it will be sufficient if you say the word 'privilege' before giving the answer. You cannot make a blanket claim for privilege for answers to all questions. If you wish to claim the privilege you must do so for each answer. Do you understand that?

…

Do you wish to read section 68 of the ASIC Act or section 1349 of the Corporations Act or take further advice on the matter?

…

Claiming privilege or immunity

The claim of privilege does not apply automatically and the examinee must claim the immunity prior to making the statement and signing the record. There is no prescribed expression for claiming the privilege, so long as the intention is evident on the face of the record of the examination.

The examinee cannot make a blanket claim at the beginning of an examination; the claim must be made in reference to each particular statement/each answer. The practice is therefore to say 'privilege' before every substantive answer.

While the examinee's lawyer may not claim the privilege on behalf of the examinee, the examinee may seek advice before answering. However, this approach used repeatedly may constitute obstruction, and the examinee may not request an adjournment for the purpose. It also creates a bad impression in the interview so should desirably be used only where necessary.

Duty of confidentiality

The ASIC officer will seek to impose confidentiality obligations on the examinee and their lawyer.

At the commencement of the examination the ASIC inspector will provide information relating to this along the following lines.

I direct that you do not disclose to any person the questions asked of you or any information or documents provided to you during this examination. I also direct that you do not disclose to any person any information or documents provided by you during this examination in a manner that discloses either the nature of the questions asked or the fact that the information and documents were provided by you during the course of this examination. This direction does not prevent you from disclosing these matters to your lawyer present at the examination for the purpose of obtaining legal advice.

A breach of this direction may amount to a contempt of ASIC or obstruction and an offence under the provisions of the ASIC Act, a breach of which carries severe penalties. This direction will remaining force until [date] unless varied or revoked by myself or [ASIC officer]. If it is necessary to vary or revoke this direction you shall be advised in writing. Do you understand that?

…

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I address this direction to you, [Lawyer], I direct that you do not disclose to any person the questions asked or information or documents provided to the examinee during the examination. I also direct that you do not disclose to any person any information or documents provided by [Examinee] during the examination in a manner that discloses either the nature of the questions asked or the fact that the information and documents were provided by [Examinee] during the course of the examination. Similarly, this direction will remain in force until [date] unless varied or revoked by myself or [ASIC officer]. If it is necessary to vary or revoke this direction you shall be advised in writing. Do you understand that?

…

Giving false or misleading information

It is an offence to give false or misleading information in an examination or hearing, unless the examinee had reasonable grounds for believing the information was true and not misleading.

A statement is false or misleading - even if literally true - if it conveys a misleading impression in the context of the examination or other disclosure process.

'Reasonable grounds for belief' include an honest and reasonable mistake of fact.

Perjury

The 'perversion of justice' offences of the Crimes Act 1914 (Cth) apply to hearings and examinations before ASIC.

Accordingly, a person knowingly giving false testimony, fabricating evidence with intent to mislead, wilfully destroying evidence, interfering with witnesses, inducing witnesses to give false or withhold true testimony, intentionally deceiving or otherwise obstructing, preventing, perverting or defeating the investigative process commits an offence under the Crimes Act.

Any privileges claimed during an examination cannot be relied on in a subsequent proceeding concerning the falsity of the statements for which privilege has been claimed.

Preparation

The key to section 19 examinations is PREPARATION. Ensure you know the format of the examination. It can be confronting and unsettling at the time, if you don't. Most importantly, try to anticipate what questions are likely to be asked and understand what your likely answers will be. Also, form an informed view on whether you are the target of the investigation by undertaking careful investigation at the outset. Know what damning or other evidence exists (eg phone records and emails)

and have advisers understand what others might say. That evidence may well emerge at your examination.

Examinee's approach

It is important that the examinee be disciplined in the way in which they respond to ASIC's questions. The overriding principle is to tell the truth and answer all questions appropriately. There are a number of other principles the examinee should bear in mind in doing that.

Principle 1: Tell the truth

It is critical that an examinee provide truthful answers to all questions. This is, and must be regarded as, the overriding principle. If an examinee misleads ASIC, this can lead to a prosecution, even if they have done nothing wrong in relation to the focus of the investigation.

Principle 2: Don't ramble

As a simple approach, the preferable answers to questions (after claiming privilege) are often 'Yes', 'No', 'Don't know', 'Don't recall' or provide an answer that is to the point and brief. If an answer goes beyond 2-3 sentences, the examinee is (as a general rule) probably going beyond answering the specific question. Some witnesses can't help themselves and provide long, rambling answers to every question. In addition to wasting a lot of time, they often introduce additional information not sought by ASIC which then becomes the subject of additional questions. Also, it is much easier to make inadvertent errors in answering questions if long winded answers are provided to all questions. Keep answers brief and to the point.

Principle 3: Listen to the question and answer it

The best way to keep an answer brief is to listen carefully to the question and answer just that question. For example, 'Was X at the meeting' should be answered (after claiming privilege) by 'Yes', 'No' or 'I don’t recall'. It shouldn't be answered 'I think he might have been; I remember that I saw him earlier in the day and we had a chat about attending the meeting; I recall getting to the meeting 5 mins late and Y and Z had already started the meeting; X was there, I think, but I may be thinking about the earlier meeting I had with him that morning, etc, etc, etc'. Answer the question.

Principle 4: Tell them what you know, not what you think would have happened

The examinee should only tell ASIC what they do know, not what they think would have happened in the guise of what they know. Examinees often try to assist ASIC by speculating and sometimes do so, without making clear they are speculating. It doesn't assist ASIC to have information provided to them that

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is purely speculative – that is nothing more than guessing. For example, if the examinee doesn't recall who attended a meeting and is asked 'Did X attend the meeting', the answer should be 'I don't recall', even if the examinee expects he might have attended. Sometimes witnesses will answer 'Yes, I think he did' or 'Yes, he would have' or simply 'Yes' if they believe he would have. If you don't know, you don’t know. Answer the question by telling ASIC what you know, not what you think would have happened. There are penalties for providing misleading answers. You can't be penalised if you genuinely do not recall whether something occurred.

Principle 5: Don't fill silent pauses

There will be many occasions where there will be pauses in the interview. The examiner may do this simply because they are determining what question to ask next, having regard to answers already provided. People find it hard to sit in a meeting where there are silent pauses and often an examinee will fill the silence by talking further about what they have been asked. If the examinee has answered the question and is waiting for the next question, they should simply sit there quietly and wait. Do not fill any silent pauses. Silence is not reflected in the transcript. Hasty, uninformed or incorrect statements are.

Principle 6: Don't try to anticipate questions

An examinee should not try to anticipate what the next questions will be. They should just answer what they have been asked. Examinees have been known to say words to the effect of 'I know where you're headed; let me assure you that X, Y and Z'. ASIC has then been known to answer. 'I wasn't aware of X, Y or Z but thank you; we'll come to that later'. The interview then goes on for another half hour, delving into areas not previously contemplated by ASIC. Don't try to anticipate questions, just answer the question you are asked. This makes the interview process a lot easier because you are simply focusing on what is being asked, rather than worrying about where you think the interview may be heading.

Principle 7: If you don't understand or don't hear the question, say so

Sometimes, examinees don't understand a question but are too embarrassed (or helpful) to say so. They then provide rambling answers, trying to answer a question they don't understand. If you don't understand the question, simply say so, in a very simple way – 'I don't understand the question'.

Principle 8: Don't be put off if you get an answer wrong

If an examinee gives an honest answer and ASIC subsequently produces a document that suggests the

position is different, don't be put off or get concerned. First, the document may be wrong (its author may have misstated the position) – so, if the examinee is confident of their position, they should stick to their position. Alternatively, it could be that they misrecalled what occurred. Don't be concerned by that; examinees are allowed to be wrong; no-one has perfect recall, particularly when the questioning involves matters that occurred months or even years earlier. You should stick to your guns if you think you are right and if you realise you were wrong in something you said earlier in the interview, simply say so and state the position as you now factually recall it. But again, do not speculate and don't panic.

Principle 9: If an examiner gets aggressive don't lose your cool

In the unlikely event that ASIC gets aggressive in their questioning, the examinee should keep their cool. Just think about the question carefully, provide truthful answers and answer them to the best of their recollection. Otherwise continue to apply all the principles, as foreshadowed here.

Principle 10: Don't be concerned if you answer 'Don't recall' or 'Don't know' a lot

Everyone has read media criticisms of witnesses answering countless questions with 'I don't recall' or 'I don't know'. For some reason, the media thinks that this suggests the witness is being evasive. It doesn't mean anything of the sort. QCs and ASIC examiners often ask the same question in numerous different ways to test the first answer or sometimes in the hope of extracting a different answer to the first answer they were given. Also, they may do so in the hope of prompting a recollection, where the witness has previously answered 'I don't recall'. If you are asked the same question in different ways and the first answer (after claiming privilege) was 'I don't recall' or 'I don't know', the answer in each case should be exactly the same (assuming that remains the case). If that is the honest position based on your best recollection, then so be it. Remember also, an ASIC investigation is invariably private. The media is not present and the examinee doesn't have to impress anyone. What matters is what is in the transcript.

Principle 11: Claim privilege!

As previously foreshadowed, the examinee needs to claim privilege before every answer. Some witnesses get embarrassed or feel awkward in doing so. It is standard procedure (at least for clients advised by lawyers experienced in the area) to do so. ASIC expects it of every witness and would be surprised if they didn't do it. So don't forget and if you do, have a system in place to remind you.

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Principle 12: Don't recall if you don't recall

'I don't recall' or 'I don't know' is a legitimate answer if there is genuine doubt in the examinee's mind of the factual position. Of course, you shouldn't say so if you do recall or you do know (the overriding principle is to tell the truth), but if you are in genuine doubt, the appropriate answer will often be 'I don't recall' or 'I don't know'. Sometimes ASIC will prompt the examinee to speculate or even invite them to speculate. If that is the case, then you may take the opportunity to make clear to ASIC that you are speculating. In doing so, you might say words to the effect of 'To be clear, I will be guessing. Do you want me to guess?'

Principle 13: Just because it's private, doesn't mean it will stay that way

ASIC interviews are held in private but are taped. Transcripts are invariably made of the interview and witnesses are usually asked to sign the transcript as a true record. Class action lawyers will almost always seek copies of the transcripts as part of their information gathering exercise. So don't offer anything beyond what ASIC asks. And implement all these principles to minimize what is handed to the class action lawyers - again, remembering the overriding principle is to answer all questions truthfully.

Witnesses almost always struggle to implement these strategies. The more self-confident the person, the less likely they are to do so. So practice is essential.

Principle 14: Who have you spoken to?

ASIC will sometimes ask who you have spoken to about the notice/investigation and what was said. They may also check telephone records to see who you called after getting the notice (or potentially after leaving the interview). Keep your recollections unpolluted by limiting discussions with others. Your lawyer should check the understanding of others, if relevant. They can also ensure it is never suggested witness tampering occurred.

Topics often raised by ASIC

Email/ mobile

ASIC will often want to know who you were conversing with at particular times so they will ask for your work/ home email address and phone numbers (home; beach house; ski flat; mobile). They will also sometimes ask for your spouse's and children's mobile numbers. If there are any sensitive calls/ emails, you are better to know of them before the interview, as you can consider potential questions that may be asked.

Company policies

If the ASIC focus is continuous disclosure or similar, ASIC often asks Board members and executives if they are aware of relevant company policies. The answer given is almost always yes, following which ASIC usually then asks the examinee to summarise it. Then ASIC invariably asks the examinee if they followed it in the particular case, following which they test the answer by examining relevant parts and asking what the examinee/the company did.

General observations on ASIC's view and the court's view of evidence

It is important to understand the emphasis ASIC tends to place on contemporaneous documents compared to a witnesses recollection of events that occurred months (or even years) earlier in a regulatory investigation. In the C7 litigation, Sackville J referred to the psychological literature emphasising the fallibility of memory, especially its susceptibility to suggestion. He quotes (at 665) the helpful insight embodied in the Guidelines Relating to Recovered Memories (2000) of the Australian Psychological Society:

‘Memory is a constructive and reconstructive process. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempt at remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval’.

ASIC (and the courts) are conscious that witnesses giving oral evidence are often being asked to recall meetings, conversations and transactions that had taken place months or even years earlier. Similarly, when witnesses are asked about their motivation for particular actions, or their intentions at certain times, they are being asked to cast their mind back months or even years earlier, to the time when they took the actions or formed their intentions. It is expecting a great deal of any witness to remember clearly what was said at a meeting or what he or she was thinking

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at a given time from a distance of months, let alone years. It is even more difficult when the recollection necessarily involves reconstruction in the context of an ASIC investigation or litigation.

In the C7 litigation, Sackville J had the benefit of an enormous volume of documentation (including electronically stored material) contemporaneous with the relevant events under review. Much of this material comprised internal emails. His Honour was of the view that email communications tend to be more revealing than more formal correspondence between parties, which is often expressed more circumspectly.

His Honour expressly noted that contemporaneous records often shed light on many of the disputed factual issues. He didn't suggest that all contemporaneous records will necessarily be reliable and noted that a judgment may have to be made about their accuracy. However, he felt that, if there is no reason to doubt them, contemporaneous records are very helpful in determining where the probabilities lie. 'The minutes of a meeting or an email summarising a recent conversation, particularly where the documents are prepared by someone with no obvious axe to grind, often will provide the 'ounce of intrinsic merit or demerit' that is worth pounds of fallible evidence derived from memories prone to distortion and reconstructions'. [para 376].

In preparing for an interview, it should be understood that ASIC is likely to accept (at least initially) any contemporaneous written record of an event or conversation, over that given orally by the witness in the interview, to the extent there is any inconsistency.

Potential uses of ASIC investigation by third parties During the course of an investigation ASIC will:

• accumulate large amounts of documents provided to it under section 33 notices; and

• create extensive transcripts of section 19 witness interviews.

ASIC must, as a matter of law, treat as confidential any information given to it during an investigation. However, there are many exceptions to this and the practice is therefore very different.

There are various ways in which third parties can access information uncovered by ASIC as part of its investigations, including the following:

• ASIC may provide transcripts (and documents referred to in transcripts) to a third party's lawyer if the lawyer satisfies ASIC that the third party is carrying on, or is contemplating in good faith, litigation in respect of a matter to which the examination related.

• ASIC can (and does) provide transcripts to other regulatory bodies, including overseas agencies.

• ASIC may be obliged to provide information to third parties under subpoena (subject to any restrictions a court may impose).

• ASIC may reveal information in court as part of any regulatory action it may take.

• Third parties may reveal information in their legal proceedings, that they obtain from ASIC.

As such, there are a number of ways that other potential litigants and the media may ultimately get access to information provided to ASIC by you under ASIC's compulsory information gathering powers.

For example, class action litigants and their lawyers regularly apply for and gain access to such information. Where ASIC has a discretion whether to grant access (it won't under a subpoena), ASIC has identified the factors it says it will have regard to when exercising its discretion, including whether ASIC's enforcement requirements … would be jeopardised by the release of the [material] and whether 'other persons may be adversely affected by [its] release …'

Don't draw too much comfort from these factors. ASIC further notes that, while it will take these factors into account, in the absence of compelling reasons to the contrary, it will generally assist litigants by disclosing material including transcripts.

If you would be affected by the release of material, ASIC may in some instances give you an opportunity to make submissions on the scope of the release and whether any preconditions should be imposed, but don’t be too encouraged by this. Such submissions rarely have an impact on ASIC's view, and if successful, usually only result in conditions being imposed requiring that notice be given to an affected person prior to the public use of the information.

The bottom line is this: class action lawyers and other litigants commonly get a treasure trove of material from ASIC as a matter of course. Therefore, whilst ASIC examinations must take place in private, it is important to be aware that your transcript may well be disclosed by ASIC to outside parties. Do not proceed on the basis that you may persuade ASIC not to release your transcript. Indeed, you should assume the opposite.

ASIC approach to enforcement Introduction

Enforcement action is one of several regulatory tools available to ASIC. ASIC states that it uses enforcement to deter misconduct. Other regulatory tools that it uses are engagement with industry and stakeholders, surveillance, guidance, education and policy advice. This section of the guide provides

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guidance of ASIC's approach to enforcement at a high level only.

The diagram over page sets out ASIC's general approach to taking enforcement action.

The specific matters ASIC considers in determining what is the appropriate enforcement action varies

according to the circumstances of each case. Its priorities evolve and change over time (for example, ASIC's focus may be on insider trading, then evolve to continuous disclosure and then potentially shift to some other area of focus). Current trends do influence ASIC's enforcement focus.

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However, ASIC does consider the following four issues in deciding whether to undertake an investigation or ultimately take enforcement action:

• Strategic significance: ASIC asks the simple question 'What is the extent of harm or loss?'. ASIC assesses the seriousness of the alleged misconduct and particularly its market impact, which includes its impact on market integrity or the confidence of investors and financial consumers. It also looks at the consequences of the misconduct for investors and others – for example, the amount of money lost and the impact of that loss on the people affected. ASIC may consider the impact of a matter on the market as so far reaching that it must investigate it.

• Benefits of pursuing misconduct: ASIC asks the simple question 'Is the enforcement cost effective?'. ASIC considers issues such as whether the misconduct is widespread or part of a growing trend and whether taking enforcement action will send an effective message to the market or whether an alternative course of action is more appropriate. ASIC is prepared to pursue matters if an important legal obligation could be tested or clarified, and it has the necessary evidence. ASIC will however have regard to the cost and time required to achieve an appropriate remedy through enforcement action. This may lead them to enforceable undertakings or a continuous disclosure 'speeding ticket', rather than legal proceedings of the type endured by the James Hardie directors.

• Issues specific to the case: ASIC will ask the simple question 'What evidence is available?'. This covers a wide variety of factors, which will obviously vary according to circumstances. They include the seriousness of the misconduct (was it dishonest or deliberate); did it lead to widespread public harm?; the time since the misconduct occurred (ASIC considers that action taken for old misconduct may have a reduced impact on the market); whether it was an isolated instance of misconduct or whether it is continuing ; whether evidence that is admissible in a court is in ASIC's possession or known to be available, to prove the allegation of misconduct.

• Alternatives to formal investigation or enforcement action: ASIC is less likely to investigate matters that would be better addressed by another agency or by private dispute resolution between those involved.

In many cases, ASIC decides it is more effective to deal with its concerns using other regulatory tools, such as engagement with stakeholders, surveillance, guidance, education and policy advice, instead of enforcement action. In some cases, it may decide that no further action at all should be taken (for example due to a lack of evidence).

There is much for companies, its executives and boards to consider in responding to any ASIC investigation. Being well prepared and beginning with the end in mind is an essential part of that consideration.

Each situation is different. This is not intended as legal advice. Please consult your lawyers if you require any specific advice on this topic. We are happy to expand on this general information, if that assists. Our authors can be contacted at Minter Ellison as follows but feel free to also contact any other contacts you have at Minter Ellison.

John Steven Partner

T +61 3 8608 2907 M +61 411 418 172 E [email protected]

Bart Oude-Vrielink Partner


Ross Freeman Partner


James Beaton Partner


Boardroom briefings - Boardtrac

Documents

Transcript of Boardroom briefings - Boardtrac