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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

Outrage over ASIC fine deals

31 December 2013

A Christmas decision by ASIC to drop its inquiries into dealings by NBA and investment bank UBS has incensed and outraged investor advocate groups.

The decision to drop its inquiries into NAB and UBS despite the corporate regulator uncovering evidence they allegedly manipulated the sharemarket, was welcomed by NAB who has agreed to a voluntary $2 million fine after it was revealed that they were the mystery client behind a shock spike in major blue-chip stocks on October 18, 2012. The unusual rise created front-page news and confusion in the market and led to an ASIC inquiry.

UBS, who was also implicated in the NAB share spike, has separately been alleged to have manipulated Australia’s key financial market benchmark and agreed to pay a $1 million donation for that misconduct without admission.

The backlash has been relentless with Governance expert Vas Kolesnikoff commenting that, “ASIC’s increasing use of enforceable undertakings, such as the Leighton Holdings $300,000 fine for three breaches of the disclosure regime after a $907 million earnings writedown in 2011, indicated a regulator unable or unwilling to fully investigate or fully enforce the law.” Kolesnikoff lambasted the corporate regulator as, a “toothless tiger in the extreme,” and said, “you hope this isn’t the end of it because it is just an embarrassment, knocking off at 5 o’clock for Christmas, just before the holidays and saying ‘let’s close the case with a $2 million fine and forget about it’. It just seems unacceptable.”

Shareholders and governance experts were also cynical and concerned about the timing of the fines just two days before Christmas suggesting that the decision reflected a rushed investigations which “failed to hold those responsible to account.” Ian Curry Australian Shareholders’ Association chairman commented that, “one assumes the announcements have been made because they are not going to draw much attention but the market is entitled to more information. It is impossible to tell whether this is a one-off or part of some broader systematic failure.”

The criticism of the corporate regulator coincides with a Senate inquiry involving more than 200 business groups and investors complaining that ASIC is failing to properly investigate complaints while unfairly shifting the blame on to others.

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