The Australian Securities and Investments Commission (ASIC) has released its latest enforcement activity - report - ASIC Report 666 ASIC enforcement update January to June 2020 (REP 666) - outlining ASIC's key enforcement actions during the last six months.

In his foreword to the report, ASIC Deputy Chair Daniel Crennan outlines the adjustments ASIC has made to its enforcement priorities and approach in light of the COVID-19 pandemic and reiterates the regulator's commitment to continuing its enforcement work and building its capability in line with its strategic plan.

Mr Crennan states,

'As I have emphasised since the Royal Commission, ASIC has a clear resolve and the Office of Enforcement is delivering on the public's expectation that we hold wrongdoers to account'.

Some key statistics: COVID-19 has not put the brakes on ASIC's enforcement activity

A comparison of the data on ASIC's overall enforcement activity over the last six months of 2019 (in REP 660) with ASIC's activity in the first six months of 2020 (REP 666) shows that the regulator has actually increased its activity in some areas despite the COVID-19 pandemic.

For example, ASIC commenced and concluded more investigations in the first half of 2020 than it did in the last six months of 2019. Likewise, more compensation/remediation was paid back to consumers and investors over the past six months than during the previous period.

Some overall points of comparison: Enforcement activity in H1 2020 vs H2 2019

Infringement notices, compensation and court enforceable undertakings

• There was a significant uptick in the amounts of both infringement penalties and remediation/compensation paid for consumers in H1 2020 as compared with the previous period.
• In H1 2020 $536,000 was paid in infringement penalties (up from $70,000 in H2 2019).
• In H1 2020, $160m was paid in compensation and remediation for consumers/investors (up from $22.2m in H2 2019).

Investigations

• ASIC commenced and completed significantly more investigations during H1 2020 than it did in the last six months of 2019.
• In H1 2020, ASIC commenced 99 investigations and completed 62.
• In H2 only 60 investigations were commenced and 40 were completed.

Bannings

• The number of directors banned from directing companies decreased from 29 in H2 2019 to 20 in H1 2020.
• The number of individuals restricted/prohibited from providing financial services/credit increased from 48 in H2 2019 to 54 in H1 2020.

Prosecutions

• 46 fewer criminal charges were laid in H1 2020 (233 criminal charges were laid) than in the last six months of 2019.

Civil penalties

• The courts imposed $12 m in civil penalties in H1 2020 (down $900k on the amount imposed in H2 2019).
• The number of civil penalty cases reported as currently before the courts is similar across the two periods: 23 in H1 2020 and 22 in H2 2019. However, the number of cases commenced decreased from 9 in H2 2019 to four in H1 2020.

Further detail: Enforcement results H1 2020

Corporate Governance

• ASIC recorded 23 corporate governance related results during the period (down from 25 in the previous period July to December 2019). The majority (11) were administrative actions against auditors, seven involved 'other governance misconduct', two involved director misconduct and two involved insolvency related misconduct.
• As at 1 July 2020, ASIC had 17 criminal and 11 civil corporate governance matters still before the courts. The majority of these being actions against directors (13 criminal actions and 5 civil actions). In contrast as at 1 January 2020 ASIC had 14 criminal and 17 civil actions in progress, the majority of which (11 of 14 criminal actions and 9 of 17 civil actions) were actions against directors.

Financial Services

• In the six months between 1 January 2020 and 30 June 2020 ASIC recorded 54 financial services related results (down from 55 in the previous period). The majority, consistent with the last period, concerned 'other financial services misconduct'.
• As at 1 July 2020, ASIC had 11 criminal and 49 civil actions still before the courts. This is a slight decrease on the last period. As at 1 January 2020, ASIC had 14 criminal and 58 civil actions still before the courts.

Markets

• ASIC recorded 11 market related results in the six months to June, up from seven in the previous period.
• As at 1 July 2020, ASIC had 11 criminal matters (4 involving insider trading, 4 involving 'other market misconduct' and 3 involving market manipulation) and 6 civil matters (4 involving continuous disclosure and 2 involving 'other market

Small Business

• ASIC recorded 130 small business related results during the period, down from 190 in the previous period.
• As at 1 July 2020, 168 small business related criminal prosecutions were still in progress (up from 162 in the previous period).

Update: Progress on actioning the referrals/case studies considered by the Hayne Commission

ASIC's report includes a brief update on ASIC's progress towards actioning the referrals/case studies considered by the Hayne Commission. According to the report, over the last six months ASIC has 'completed many of the outstanding investigations into referrals and case studies' and this has resulted in the commencement of four civil penalty cases. The report also notes the 'very significant civil penalties' imposed on two financial institutions' imposed by the courts over the past six months.

[Sources: ASIC media release 22/09/2020; ASIC Report 666 ASIC enforcement update January to June 2020 (REP 666); ASIC Report 660 ASIC enforcement update July to December 2019 (REP 660)]