Corporate watchdog eyes ‘greenwashers’, crypto rorts in court

ASIC’s head of enforcement says cracking down on companies who falsely pump up their climate credentials to investors is on the regulator’s agenda for 2024.

ASIC deputy chair Sarah Court, Monash Business School senior deputy dean, Professor Michelle Welsh and former CBA group general council, Carmel Mulhern during the ASIC annual forum at the Sofitel in Melbourne. Aaron Francis / The Australian

Cracking down on companies that falsely pump up their climate credentials to investors and protecting consumers from risky cryptocurrency stocks is on the corporate regulator’s new year agenda, as it prosecutes key big ticket court cases.

Australian Securities and Investments Commission deputy chair Sarah Court also told The Australian it is the corporate watchdog’s job to test the limits of laws in court.

“One of the most important roles of a regulator is to make sure that the laws that have been enacted by the parliament to protect investors or consumers and market integrity, in ASIC’s case, are properly enforced and that the regulator makes sure that it tests the full boundaries of those laws,” she said.

“So a regulator that is only taking cases that are winnable suggests that you’re not really testing the full breadth of those laws.”

Ms Court said regulators are often criticised for taking on cases they lose, but there is a “bigger public purpose” in taking them on.

“If we’re concerned about conduct, and its impact on consumers or investors, we need to put that set of facts before the court and see what the judge decides. This inevitably means you’re going to lose some of the cases you’re taking on,” she said.

“When we are successful, we communicate it widely to the industry to deter other firms from behaving in similar conduct.”

Countering criticism of ASIC’s enforcement record from Liberal senator Andrew Bragg, Ms Court told the regulator’s annual forum in November last year in the three years to June 30, it kicked off more than 100 civil actions against 220 defendants.

As well, more than $600 million in criminal and civil penalties was handed down by the courts during that period as a result of ASIC investigations.

The watchdog will look to continue that track record this year, with a number of key cases due to be litigated including those focusing on so called greenwashing conduct against Vanguard Investments Australia and Active Super.

Mercer is also set to be hit with a penalty worth $11.3m in an upcoming Federal Court Judgement.

ASIC broadly speaking alleged misleading and deceptive conduct in those cases.

But looking ahead and amid new climate disclosure laws, due to be introduced this year, Ms Court said climate focused enforcement will expand and look at broad net zero statements or environmental targets that are made.

“We want to understand the basis on which those claims are made,” she said.

“We’re not looking to catch people out at the margins who are making statements and using their best efforts or reasonable endeavours to deliver on those statements.

“What we’re really interested in is where people are making these statements as a marketing attempt or promotional aim to induce people to invest with them and are really doing nothing or something that is clearly unreasonable behind the scenes to deliver on that.”

Judgements in key crypto matters, including against Qoin and Finder Wallet are also due and further hearings in a case against Block Earner have been scheduled.

ASIC alleged Qoin made false or misleading statements and engaged in unlicensed conduct and said Finder Wallet provided unlicensed financial services. It has also claimed Block Earner, a fintech company, provided unlicensed financial services in relation to its crypto-asset based products.

Ms Court said crypto remains an area of focus.

“We’ve been trying to warn investors about the risks of crypto for years now and we make that point at every opportunity,” she said.

“We believe that many crypto assets replicate financial products, which is why we are taking on these cases.”

Originally published as Corporate watchdog eyes ‘greenwashers’, crypto rorts in court