On 24 February 2021, the Australian Securities and Investment Commission (ASIC) released its policy for immunity from civil penalty or criminal proceedings for a contravention of a provision in Part 7.10 of the Corporations Act^[1]. These contraventions include market manipulation, insider trading and dishonest conduct in the course of carrying on a financial services business. This follows successes reported by the Australian Competition and Consumer Commission (ACCC) in encouraging disclosure, and detecting and dismantling cartel misconduct after releasing its immunity and cooperation policy for cartel conduct in September 2014, (updated effective 1 October 2019)^[2].

Will ASIC’s new Immunity Policy have a similar success rate to the ACCC?

You might be following the AFR’s “The Sure Thing“ podcast series around Australia’s largest insider trading case^[3], or the mysterious disappearance of Sydney’s notorious conwoman Melissa Caddick. Will ASIC’s new immunity policy have a similar success rate to the ACCC, in assisting with the detection and policing of financial market misconduct by individuals, such as that perpetrated by the infamous duo Christopher Hill and Lukas Kamay, or Ms Caddick’s Ponzi scheme?

Part 7.10 of the Corporations Act: Misconduct

The type of market misconduct and other prohibited conduct listed in Part 7.10 of the Corporations Act, is ever evolving and increasingly difficult to detect before exponential damage is inflicted on helpless victims. These include:

• 1041A Market manipulation
• 1041B,C False Trading and market rigging
• 1041D Dissemination of information about illegal transactions
• 1041E False or misleading statements
• 1041F Inducing persons to deal
• 1041G Dishonest conduct
• 1041H Misleading or deceptive conduct

By giving individuals the opportunity to self-report their part in these contraventions, co-perpetrators, scapegoats and others, such as Christopher Hill, who may have fallen into a trap may be granted immunity from the civil and criminal penalties, including fines and/or imprisonment that could apply. This in turn may limit the extent of misconduct and assist ASIC with its investigations and prosecutions.

Eligibility for immunity

The immunity policy comes as a healthy addition to ASIC’s pre-existing policy to encourage and fully recognise cooperation^[4]. The immunity policy is applicable to anyone who thinks they may have contravened any of the above prohibitions with at least one other person, and intends cooperating with ASIC in relation to its investigation and any proceedings that may follow.

Included in the conditions that ASIC will consider before granting immunity are inter alia:

• That you were involved in the misconduct but were not the instigator and did not coerce others to participate; and
• You are the first person to apply for immunity and your disclosure (and admission) is prior to ASIC conducting its own investigation.

The human impact of financial misconduct

At this stage while it is still unknown whether Ms Caddick acted alone, or with the involvement of others, one cannot help wondering if this policy could have prevented her disappearance, possible suicide and financial impact on her investors, not to mention the trauma caused to her family. Further, had such a policy been in place in 2014, perhaps this legislation could have created a pathway for Christopher Hill to report Lucas Kamay’s scheme and avoid jail time. Creating a widespread awareness of the immunity policy may be the catalyst to preventing large financial losses and jeopardising the stability of our financial markets.

^[1]https://asic.gov.au/about-asic/dealing-with-asic/asic-immunity-policy/

^[2]https://www.accc.gov.au/publications/accc-immunity-cooperation-policy-for-cartel-conduct-october-2019

^[3]https://www.afr.com/podcast/the-sure-thing

^[4]http://download.asic.gov.au/media/1338866/info172-published-9-April-2013.pdf