Submission to the Senate Economics References Committee Inquiry into ASIC Investigation and Enforcement

Dear Secretary

Submission to the Senate Economics References Committee Inquiry into Australian Securities and Investments Commission Investigation and Enforcement

This submission has been prepared for the Senate Economics References Committee regarding its inquiry into the Australian Securities and Investments Commission investigation and enforcement activities. The aspects of the terms of reference which are dealt with in the submission are:

The capacity and capability of the Australian Securities and Investments Commission (ASIC) to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct, with particular reference to:
…
(b) the balance in policy settings that deliver an efficient market but also effectively deter poor behaviour;…
(d) the range and use of various regulatory tools and their effectiveness in contributing to good market outcomes;
(e) the offences from which penalties can be considered and the nature of liability in these offences;
(f) the resourcing allocated to ensure investigations and enforcement action progresses in a timely manner; …

This submission makes the following findings:

• Imposing criminal penalties with respect to corporate offending, based on the disproven theory of marginal general deterrence, is not effective at deterring bad behaviour.
• Imposing criminal penalties is a disproportionate response to corporate wrongdoing.
• White collar offenders should not be incarcerated, but should be made to financially pay for their crimes through restitution.

In making this submission, we understand that part of the catalyst for this Inquiry is the view that ASIC is not conducting enough investigations and prosecutions. The recommendations in this submission do not support this sentiment. The Committee will benefit considerably by receiving evidence-based recommendations which can be used to ensure that the activities of ASIC are conducted in a manner which is of greatest utility to the community.