Where ASIC fears to tread?
The Australian Securities and Investments Commission (ASIC) arguably chose a poor strategy when it sought to reassure consumers about its inaction on matters relating to the Reserve Bank of Australia-related companies, Securency International and Note Printing Australia, by referencing action it had pursued against financial planners.
The allegations which have been leveled against senior executives within both the RBA and its related companies are serious, and while ASIC may have had good reasons for opting not to pursue prosecutions or other actions against those executives, it owes it to Australian taxpayers to explain why.
That is why it is entirely proper for the Senate Committee currently reviewing ASIC’s activities to traverse the reasons why the nation’s corporate regulator has chosen not to pursue allegations concerning the conduct of executives who were not just company office-holders but office-holders in companies substantially owned by the Commonwealth.
That Senate Committee scrutiny is also required because the executives named by the media in relation to the activities of the RBA, Securency and Note Printing Australia are still active in Australian corporate life.
The regulatory activities of ASIC extend well beyond its oversight of the financial planning industry and it frequently deals with issues of corporate misconduct ranging from insider trading to trading while insolvent.
Over the years, the regulator has shown little regard for the wealth or status of those it has pursued, with names such as Rene Rivkin and Fortescue Metal’s Andrew Forrest coming to mind.
Further, while ASIC has had some notable victories in the courts, it has also had some very public failures.
All of which makes it perplexing, at least to Money Management, why ASIC should choose to cite its successes against financial planners as a vindication of its effectiveness – and a reason why consumers should not read too much into its decision not to pursue the RBA-related matters.
There seems to be no argument that what occurred with respect to Securency International and Note Printing Australia was a scandal which caused its own share of embarrassment within the RBA and the Government.
On that basis alone, it is to be hoped that those running ASIC were fastidious in gathering the facts which informed their decision not to pursue the matter.
Whatever the reasons for the ASIC decision, the regulator has been economical with the detail, issuing just a four-paragraph statement in April last year – and then providing no more detail when it sought to answer questions on the issue last week.
Given the role of the RBA and the gravity of the allegations regarding Securency International and Note Printing Australia, ASIC would do well to publish its formal reasons for not pursuing the issue. If it does not, the Senate Committee should require its chairman, Greg Medcraft, to do so.
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