Joe Longo finally struts his stuff

ASIC chairman Joe Longo. Picture: David Geraghty

For Joe Longo, Thursday will be his first big day out in his role as Australian Securities and Investments Commission chair, overseeing the regulator’s first in-person conference in three years.

While he has been the country’s top corporate cop since June 2021 – and has made several speeches – Covid-19 has prevented him really coming out and stamping his name on the job.

That is about to change, with ASIC opting for a two-day in-person conference in Sydney, covering a broad range of issues, from the risks facing Australian companies to super, climate change and cryptocurrencies.

Longo’s predecessor James Shipton had a difficult time during his three years in the job.

He was at Harvard Law School in 2017 when he was chosen in haste for the role, after front-runner John O’Sullivan withdrew after attacks from Labor as a result of his friendship with then prime minister Malcolm Turnbull.

Taking on the job in 2018, Shipton was forced to deal with the fallout from the financial services royal commission, which probed events that had not occurred under his watch – at a time when he was not even in Australia.

Inquiries into his expenses overshadowed his tenure and saw him eventually decide to resign in January 2021.

Longo took over at the height of the pandemic last year, working through many issues that arose from the royal commission and overseeing changes that had been in train for some time – including a significant increase in penalties for breaches of the Corporations Act, which came into force this year.

A key role in running the regulator in Australia is steering between the need to take legal action against companies, which can be costly and take many years to get a decision, and faster, more pragmatic action, often in the form of enforceable undertakings, which – if properly done – can deal more quickly with misconduct.

As ASIC has discovered, taking legal action – particularly criminal action – can be expensive and not ultimately too successful. As ASIC representatives pointed out at the time of the royal commission, the level of penalties available under the Corporations Act at the time were low, a factor discouraging expensive legal action.

Longo has had front-line experience in making these decisions, having seen it all as ASIC’s director of enforcement for five years. His career included being general counsel for Deutsche Bank in London and Hong Kong for 17 years – giving him a sound background in the international legal world. He was senior adviser for law firm Herbert Smith Freehills before being tapped on the shoulder by the Morrison government for the top job last year.

Longo has sought to present himself as a pragmatist who wants to roll up his sleeves and communicate with the business ­community.

He was given a hard time in the Senate explaining the decision not to take any action as a result of the royal commission into Crown Resorts, pointing out that events had occurred years before and would need to be relitigated if they were to have any chance of success.

But ASIC also moved last week to appeal the Federal Court’s decision to dismiss its action against the Commonwealth Bank and its former subsidiary, Colonial First State Investments, over conflicted remuneration – action originally launched in June 2020.

In a speech given in June, Longo said ASIC “must continue to be a strong and targeted law enforcement agency and an active litigator against misconduct”.

But he made it clear he wanted to take a practical approach to obligations on holders of financial service and credit licences to report compliance breaches, which came into force in October 2021.

“ASIC’s focus is practical implementation and working with industry to find and employ commonsense solutions to issues that arise,” he said.

“We have been working on our processes to effectively triage the reports we receive, so that we target our attention towards the most serious conduct.”

While his comments were referring specifically to breach reporting in the financial services sector, they are an indication of a broader approach to dealing with corporate misconduct.

Longo also has a wide remit of new issues to deal with overseeing Australian business 2022.

The regulator is keeping a keen eye on the risks of the crypto sector, supporting moves by the Albanese government to establish a regulatory framework around the growing but volatile industry. This has been signalled out as a key subject for discussion at the conference on Thursday – a session to be chaired by Longo himself.

Climate change is another area that will be discussed.

The session looks at “the challenges faced by companies and investors to meet environmental targets as well as how the international regulatory regime is responding to ensure transparency, trust and integrity in the system”.

The session comes at a time when the government is considering how and when to roll out its own regulatory regime for climate change reporting, which is behind moves by regulators overseas, particularly in Europe.

ASIC has already made it clear it is taking a close look at greenwashing. It took its first action last week against listed energy company Tlou Energy, fining it a total of $53,000 as a result of infringement notices issued as a result of false or misleading statements on sustainability made to the ASX in October 2021.

Announcing the action, ASIC said it was highlighting that greenwashing – “the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical” – and sustainable finance were a “key priority” for the regulator.

In his speech to the conference on Thursday, Longo is expected to talk about the increasing risks facing corporate Australia. For its part, the corporate sector will also be looking to Longo for more guidance on how he plans to approach his job – working in a practical way on the challenges of the future, but making sure that executives have plenty of incentives to comply with the law.