ASIC has just announced a new policy that allows individuals who think they might have been involved in market manipulation, insider trading, dishonest conduct or other contraventions of Part 7.10 of the Corporations Act 2001 (the Act) to apply for immunity from civil penalty or criminal proceedings. This policy expands ASIC’s ability to identify and pursue serious misconduct in complex markets and financial services and could lead to swift effective outcomes to investigations that might otherwise be complex and drawn out.
A contravention of Part 7.10 of the Act carries a criminal penalty of up to 15 years in prison or a civil penalty of up to about $11 million, in the case of corporations. In addition, if a Court determines that a benefit has been derived and a detriment has been avoided as a result of the contravention, these amounts can be multiplied up to three times. Forfeiture orders may also apply to the net benefits of any offence under proceeds of crime legislation.
Like the ACCC’s Cartel and Cooperation Policy, which incentivises a first party to disclose cartel conduct which would otherwise be difficult for the ACCC to discover, ASIC’s immunity policy incentivises individuals who have, together with other individuals or corporations, contravened Part 7.10 of the Act, to reveal that contravention where it might otherwise have gone undiscovered. However, the policy sets out a number of hurdles for an applicant to clear before immunity is granted, so it will be interesting to see what impact the policy has in practice.
A person is eligible for immunity under the policy if:
If a person satisfies the conditions for eligibility, they can approach ASIC and request the issue of a marker. As in cases of applications for immunity for cartel conduct, if granted, a marker indicates and preserves the applicant’s status as the first individual to apply for immunity in respect of a particular misconduct.
To obtain a marker, the applicant needs to provide ASIC with enough detail about the misconduct for it to confirm no other person has already been issued a marker for the same misconduct.
If an applicant receives a marker, they can then decide whether to proceed with the application or not. If they choose to proceed, they will need to provide ASIC with a detailed description of the misconduct, including who was involved in it. They may also be required to provide documents and to be interviewed by ASIC.
It is important to note that, if an applicant withdraws their application or is not granted immunity, ASIC may indirectly use any information it has received to aid it in its investigation, including to gather evidence that could be used against the applicant, or any other party. Applicants will likely weigh up this risk carefully before making an application.
Another important consideration for applicants may be that even with immunity they will remain exposed to administrative and compensation actions:
If ASIC decides to grant immunity, there is a different process for civil and criminal immunity.
In civil penalty proceedings, ASIC may grant:
Immunity from prosecution in criminal proceedings can only be granted by the Director of Public Prosecutions (DPP). If ASIC considers an immunity applicant has satisfied the conditions for immunity, it will make a recommendation to the DPP that immunity from prosecution be granted. The DPP will ordinarily:
While the immunity policy could be a game changer for ASIC in some investigations, for applicants, the eligibility criteria and ongoing obligations they will need to adhere to get final immunity are quite onerous meaning it may only be attractive in quite specific circumstances.
On its face, the policy suggests that applicants may not have real certainty until near the end of the process, about whether they will be granted final immunity. It will be interesting to see how ASIC approaches this in practice and whether it is able to encourage individuals to embrace this policy.
For more information please contact our team.
Edward Martin, Partner
Kelly Griffiths, Partner
James Macdonald, Senior Associate