ASIC proposes pathway to immunity from prosecution for misconduct

ASIC says helping it identify market manipulation, insider trading and dishonesty may earn immunity from prosecution.

ASIC will not provide immunity from administrative or compensatory actions.

People who breach financial services and markets laws will be given a pathway to immunity from prosecution under new laws proposed by the corporate regulator.

The new policy from the Australian Securities and Investments Commission is aimed at boosting the capacity of the regulator to identify and take action against breaches of markets and financial services laws.

The corporate regulator has proposed a policy that would provide immunity from both civil and criminal proceedings for individuals for serious offences such as market manipulation, insider trading and dishonest conduct.

ASIC will not provide immunity from administrative or compensation actions.

Immunity was a key factor in the ongoing ANZ cartel case that has been grinding through the courts.

JP Morgan and its lawyers Gilbert and Tobin informed the competition regulator about the potential cartel behaviour by banks and bankers involved in the ANZ capital raising.

Under the new rules, ASIC would grant civil immunity and co-operate with the Commonwealth Director of Public Prosecutions to provide immunity to people who apply and co-operate with the regulator.

ASIC Commissioner Sean Hughes said new tools were aimed at detecting and dealing with misconduct.

“The immunity policy enhances ASIC’s ability to identify and take enforcement action against complex markets and financial services contraventions,” he said.

Applications for immunity must be made via an online form, an email to the regulator, or a call to the ASIC Immunity Hotline.

The potential of immunity will not be available to corporations, and only to the first person that comes forward and passes the criteria set out by the regulator.

Those who do not pass the criteria but commit to working with ASIC would be given credit for their co-operation, but will not be granted immunity from prosecution.

ASIC will advise those who come forward to report criminal activity if they are the first.

If the first reporter of activity withdraws their co-operation the subsequent reporters may be considered as first reporters and granted immunity.

If the person who first reports the criminal activity fails to provide sufficient information “in the time period given” ASIC may also cancel their immunity.

If immunity is cancelled information provided, including witness evidence, will not be used by ASIC or the DPP directly as evidence.

“ASIC may use such information indirectly to further our investigation, including to gather evidence that could be used against you, or any other party, in civil penalty criminal proceedings,” the regulator said.

If ASIC determines that others have been informed about the reports and attempts to seek immunity, it may be cancelled.

Anyone who has coerced others to engage in the misconduct being reported will not be granted immunity.

“We recognise that it may be difficult to decide whether a party has behaved in a coercive manner based on the amount of information that you provide when you apply for immunity,” ASIC said.

“In some circumstances, we may require you to demonstrate that you have not coerced others into participating in misconduct before conditional immunity is granted.”

The new rules will be reviewed every two years.