A poor start for the ASIC Law Reporter

Saturday, 01 January 2000


    The year 2000 - what does it hold in store for the Australian Securities and Investments Commission and its 'clients'?

    The year 2000 has not started off well for ASIC. Indeed, the year 1999 ended badly for that organisation (with its loss in the Edensor case - discussed below). The new year started with the press and others being critical of the way the involvement of ASIC and the Director of Public Prosecutions in the Yannon matter was brought to a close after four years of investigations. This decision has also brought both ASIC and the DPP under close scrutiny again from commentators, politicians and others. It is neither necessary nor appropriate to delve into the Yannon matter for the purposes of this note. The fact of the matter is no-one was prosecuted and everyone is innocent as far as the law is concerned. What is most disappointing from everyone's point of view is that complex matters such as this (and there are others) have required lengthy investigations often with a negative result in the context of any prosecution being taken. After all taxpayers' moneys are involved in these lengthy investigations. It is not in the interests of the community, and of course galling for the parties who are the subject of the investigation, as well as for the stock markets, for these delays to occur.

    We depend on the existence of a firm, efficient and speedy regulatory process. Investors want certainty in the way in the law is to be administered and the kind of comments made following the conclusion of the Yannon affair won't help, despite the statesmanlike manner in which Alan Cameron dealt with the matter. ASIC is often very dependent on the DPP in pursuing any claims. It has been suggested by some, as a result of Yannon, that perhaps a serious fraud section or organisation should be established to deal with matters which are beyond the day-to-day administrative tasks of ASIC. In the writer's view ASIC has been too many responsibilities to undertake since the implementation of the Wallis Report. While it has been given these additional obligations and responsibilities it has not been given the necessary resources to deal with all these matters. Furthermore, the courts have not been terribly helpful to ASIC in dealing with the legislation that it has to administer. One can only sympathise with Cameron and his colleagues as they face more difficult times ahead.

    These difficulties have not been made any better by the decision of the Full Federal Court at the end of 1999 Edensor Nominees Pty Ltd v ASIC ((1999) 20 ACLC).

    In this case the Full Federal Court ruled that the Federal Court itself did not have the power to deal with challenges brought by ASIC against parties who allegedly breached the Takeover Code by engaging in what might be described as collective action in pursuing a target company. This conclusion was as a direct result of the Wakim decision in which the High Court handed down a major ruling in 1999 (Re Wakim (ex parte Darvall & Ors) (1999) 73 ALJR 839). That High Court decision remains an albatross around the neck of ASIC and various other regulators (for example the Australian Competition and Consumer Commission in relation to competition cases which involve State laws rather than federal laws). Regrettably, the political solution that is being offered by both the Federal and State governments is inadequate. It will prove to be another burden for our regulators. (The federal and State governments are wanting to move by way of constitutional referendum in the year 2002.) There is still some hope that the High Court may be given an opportunity to revisit the question during 2000 and that it will rule in a more constructive fashion in the next case than it did in Re Wakim. It is vital for all Australians that we have a strong and efficient regulator at the helm of our corporations and securities law and the markets. Any undermining of the confidence in such an organisation would be a devastating blow to the Federal Government's plan to make Sydney the financial centre of the Asia-Pacific region (especially in the context of the financial markets). It is important that any differences between federal, State (and territory) governments are quickly resolved in areas where they remain. There should be a common pursuit of any new and important legislation (such as CLERP 5, 6 and 7) that will facilitate a more efficient and effective operation of the securities markets. We also need a speedier and fairer system for the investigation and the pursuit of any breaches of the relevant legislation, especially where criminal remedies are being pursued.


    The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.

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