ASIC relief - watchdog not all bite
Requests for mercy to the corporate regulator from those who have broken Financial Services Reform (FSR) laws are on the sharp decline, but the proportion let off the hook by the Australian Securities and Investments Commission (ASIC) remains stable.
According to the latest of three reports on relief provisions released last week, in the period from January 1 to April 30, 2005, ASIC considered 481 requests for relief from people in breach of FSR laws. That figure is down substantially from 915 applications received in the period from August 15 to December 31, 2004.
Claims by ASIC that it will try to work with businesses to sort out any problems and only take action in more extreme circumstances were again backed up by the sheer proportion of applicants given a second chance.
Of the 481 relief applications submitted, ASIC ended up letting 404, or 84 per cent, of the applicants off the hook, while 77 applications were rejected.
Similarly, in the last report, 86 per cent of relief applications were accepted.
Some of the transgressions the corporate regulator decided to punish despite formal requests for mercy included:
operating an education seminar about how to trade shares on the stock exchange without an appropriate licence;
including public information on disclosure documents without the regulator’s consent; and
picking up statements from product providers that were supposed to go straight to clients.
Situations where ASIC was more benevolent included allowing an Australian Financial Services Licence (AFSL) holder get away with operating the business of another AFS licensee which it was in the process of acquiring, and allowing a transaction specific product disclosure document to be used for the issue of stapled securities.
Similar to the previous report, a number of foreign investment schemes offering products in Australia were granted relief from holding an AFSL on the basis that their own local regulators were sufficiently equivalent to Australia’s.
Unlike the previous report, ASIC provided no examples of any requests for leniency related to breaches of statement of advice requirements.
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