ASIC has bolstered its enforcement toolkit by launching its new immunity policy for market misconduct offences, its first formal immunity policy.
An individual (not a corporate) can now seek immunity from ASIC from civil and criminal proceedings for market misconduct and specific financial services contraventions under Part 7.10 of the Corporations Act 2001 (Cth) if they are the first to pass the criteria set by ASIC and provide co-operation to ASIC in its investigations.
The new policy – the first of its kind for ASIC – is aimed at encouraging self-reporting by individuals and to better equip ASIC in identifying and taking enforcement action against complex market misconduct contravening Part 7.10 of the Corporations Act, such as market manipulation, insider trading, false trading and market rigging, and dishonest, misleading and deceptive conduct concerning financial products and services.
This immunity policy paves the way for ASIC to encourage individuals (sometimes inadvertently) caught up in any market misconduct to self-report. Care will need to be taken by companies to ensure their self reporting policies and company internal investigations are consistent and do not create a conflict of interest between the individual and her/his employer as a result of the individual's ongoing assistance with ASIC's investigation and any subsequent proceeding.
How ASIC's new immunity policy will work
- ASIC can grant immunity from civil penalty proceedings and recommend the Commonwealth Director of Public Prosecutions grant immunity from criminal prosecutions as well.
- The policy however does not permit ASIC to grant immunity to a corporation who suspects any of its employees have been involved in suspected market misconduct.
- The immunity will only be granted to the first individual who satisfies the immunity criteria. Accordingly, if an individual suspects they may have been involved in misconduct, it is important that an individual makes contact with ASIC to request the issue of a "marker" to preserve the individual's "first-in status". ASIC will not issue any other markers for the same conduct.
- An individual is eligible for immunity only if ASIC has not already commenced an investigation into the misconduct to which the disclosure relates. The immunity is also subject to certain conditions, including providing full co-operation to ASIC in any subsequent investigation and proceeding.
- Late comers may miss out on immunity if the first mover meets the criteria for immunity.
- After receiving a "marker" an individual can proceed with an immunity application by providing a detailed and specific description of the misconduct in writing (called a "proffer"). ASIC may then grant conditional immunity followed by final civil penalty immunity after the completion of litigation or trial against other person(s) for the alleged misconduct, if the relevant conditions in the policy are satisfied.
- The continuation of any immunity is conditional upon full, frank and truthful disclosures and the intentional withholding of any evidence or information by an individual may jeopardise their immunity status. This will inevitably result in the individual providing ongoing assistance to ASIC during the course of ASIC's investigation and any subsequent proceeding.
- Disclosures and information provided by an individual granted immunity can be used by ASIC in its investigations and any subsequent proceedings concerning the alleged misconduct. This includes using the information against others involved in the alleged market misconduct.
The policy is aimed at encouraging individuals to come forward early to ASIC to enable ASIC to detect market misconduct and take enforcement action against specific markets and financial services breaches of the law. This is in line with ASIC's strategic priorities for 2020-2021 to continue to identify, disrupt and deter the most harmful conduct, including through enforcement action with a particular focus on significant market misconduct.
If market misconduct contraventions are suspected, companies should carefully consider the potential implications of any first mover immunity grants, including the effects on a company's internal investigation and any potential ASIC investigation stemming from the disclosure.
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