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Australia: Securities Regulator to Have Greater Powers, Tougher Penalties

(Feb. 3, 2010) On January 28, 2010, the Australian federal government announced plans to increase the maximum penalties that can be imposed for market misconduct. The Australian Securities and Investment Commission (ASIC) will also have greater powers to investigate and prosecute market offenses. (Press Release, Hon. Chris Bowen, Greater Powers to the Corporate Regulator to Pursue Market Misconduct (Jan. 28, 2010), available at

  • The maximum pecuniary penalty for individuals would be increased from the current AU$22,000 (or AU$220,000 for insider trading) to AU$500,000 (US$441,526) or three times the profit made or loss avoided through the commission of the offense;
  • The maximum term of imprisonment would be doubled from five to ten years;
  • For corporations, the maximum penalty would increase from AU$1 million to AU$5 million (US$4.4 million), or three times the profit made or loss avoided, or 10% of the annual turnover of the corporation in the relevant period;
  • The Telecommunications (Interception and Access) Act 1979 would be amended to include market and insider trading offenses in the list of serious offenses for which interception can be used in an investigation; and
  • ASIC's existing search warrant powers would be amended to allow it to execute a warrant without needing to first issue a notice to produce. (Id.)

In explaining the reasons for the proposals, the Minister for Financial Services, Superannuation and Corporate Law, Hon. Chris Bowen, said that the number of trades referred by market operator ASX Limited to ASIC is “substantial enough to warrant my concern and the government's concern.” (Rachel Pannett, Chris Bowen Unveils Changes to Give Securities Regulator More Power to Punish, THE AUSTRALIAN, Jan. 28, 2010, available at
.) Another cause for concern is the “noticeable trend” of share prices increasing prior to market sensitive announcements being made. (Id.) Some commentators also believe that the outcomes of recent high profile court cases lost by ASIC might have been different if it had had more powers. (Elizabeth Knight, More Powers Do Not Mean More Convictions, THE AGE, Jan. 29, 2010, available at

The expanded powers would put ASIC in line with other regulators, including the Australian Competition and Consumer Commission. (Press Release, supra.) The Minister said that the changes “will ensure that ASIC is properly equipped to investigate and prosecute serious corporate misconduct, which has the potential to cause significant harm to the economy and investors.” (Id.) He further stated that the changes “will bring Australia in line with the United States as the nation with the toughest penalties for these types of offences.” (Michael Janda, Govt to Raise Fines, Jail Time for Corporate Crooks, ABC NEWS, Jan. 28, 2010, available at

The proposed legislative changes will be released in draft form later in 2010. (Press Release, supra.)