ASIC's new immunity policy: What is it? What does it aim to do?

3 minute read  24.03.2021 Kate Hilder, Mark Standen, Siobhan Doherty

A short overview of the key elements in ASIC's new immunity policy


Key takeouts


  • ASIC's new immunity policy provides an avenue for an individual who has engaged with others in market misconduct (in contravention of Part 7.10 of the Corporations Act 2001 (Cth)) to apply for immunity from civil and criminal penalty proceedings
  • A key plank of the policy is incentivising individuals to come forward early by limiting eligibility to claim immunity to the person who is 'first in' to report their involvement in the misconduct
  • Under the policy, immunity is not granted until fairly late in the process (and is then conditional on meeting various ongoing conditions)
  • The release of the new policy underlines ASIC's focus on targeting corporate misconduct following the Hayne Commission

The new policy

On 24 February 2021, ASIC published an immunity policy under which the first individual to report their involvement (with at least one other person) in market misconduct in contravention of a provision of Part 7.10 of the Corporations Act 2001 (Cth) (the Act) may be eligible to apply for immunity from civil and criminal proceedings.

The policy is intended to both incentivise individuals to voluntarily come forward by offering a chance to avoid potentially substantial penalties (eg gaol time) and to assist ASIC in taking action against misconduct that may otherwise be difficult to identify or address, enhancing ASIC's enforcement toolkit.

Conduct covered

The policy applies to all civil and criminal penalty provisions in Pt 7.10 of the Act. This includes for example provisions dealing with insider trading, market manipulation, false trading and market rigging, and dishonest, misleading and deceptive conduct in relation to financial products and services.

The policy does not apply to compensation proceedings or administrative proceedings (eg disqualification from managing a corporation or a ban on providing financial services or engaging in credit activities).

Eligibility

Paragraph 11 of the policy sets out the eligibility criteria. Broadly, individuals may be eligible if they meet all of the following conditions:

  • they are the first person to report to ASIC that they may have contravened, with at least one other person, a provision in Part 7.10 of the Corporations Act
  • they admit that they have participated in/are participating in the misconduct
  • they are not the instigator of the misconduct and ASIC is satisfied that they did not coerce others into engaging in the misconduct
  • they have either ceased already or are prepared to immediately cease their involvement in the misconduct
  • they provide 'full, frank and truthful disclosure, have cooperated fully and expeditiously while making the application, and have undertaken to continue to do so throughout ASIC’s investigation and any ensuing court proceedings'.

In addition, ASIC must not have already commenced an investigation in respect of the misconduct when the disclosure is made.

Corporate entities are not eligible under the policy and ASIC will not accept joint immunity applications made on behalf of more than one individual.

The process of securing immunity

Securing 'first in' status in the 'immunity queue'

An application for immunity starts with admitting involvement in misconduct to ASIC and applying for a 'marker'. This 'marker' operates to secure (for a limited time) the status of the applicant as the first to apply for immunity in respect of specific misconduct. Importantly, as long as an individual holds the marker, no other individual is eligible to apply for immunity for the same conduct.

This is intended to encourage individuals to come forward as soon as possible – and at any rate, before other parties involved in the misconduct - or risk being ineligible under the policy.

Where a marker is not available, ASIC will still keep a record of the details of the application and the applicant's position in the 'immunity queue'. Should the 'first in' applicant ultimately be deemed ineligible, or withdraw their application for immunity or where the applicant's immunity is revoked, the next person in the 'immunity queue' may become eligible to receive a marker.

ASIC comments that applicants not eligible under the policy are still able to 'seek lenient treatment' by cooperating with ASIC's investigation as outlined in Information Sheet 172.

A staged, conditional process

After a marker is granted, the applicant is then required to provide a detailed written description of the misconduct (referred to in the policy as a 'proffer'). ASIC makes clear that any grant of 'conditional immunity' from civil or criminal proceedings is contingent not only on meeting the eligibility criteria but on the proffer including 'sufficient information for ASIC to determine the nature of the misconduct and the other person(s) involved in the misconduct' including the type of evidence that can be provided.

If immunity is ultimately not granted, information included in the proffer document may still be used by the regulator to further its investigation.

Limited scope

ASIC makes clear that a 'marker' and any subsequent grant of 'conditional immunity' is specific to the reported conduct. This means that should it emerge, after a marker and conditional immunity have been granted, that the misconduct is broader than first reported, then the individual may need to either apply for an expansion of their conditional immunity or make a separate and additional application to cover the conduct.

Immunity from civil penalty proceedings

A grant of conditional immunity once granted will remain in place and become final only after completion of civil proceedings against the other individual(s) involved in the misconduct. The grant of final immunity is also subject to the applicant meeting certain conditions including:

  • maintaining their eligibility under paragraph 11
  • forfeiting the profits of any wrongdoing and (where ASIC considers it to be appropriate) making restitution to the victims of any wrongdoing
  • providing 'full, frank and truthful disclosure and cooperate fully and expeditiously throughout our investigation and any ensuing proceedings'
  • maintaining confidentiality regarding their status as an immunity applicant/details of the investigation (unless granted written consent by ASIC/required by law).

Immunity from criminal proceedings

Where ASIC is satisfied that an individual meets the eligibility criteria and with the information provided in the proffer, ASIC will make a recommendation to the DPP that immunity from prosecution be granted on a conditional basis. The DPP will then exercise its own independent discretion and where it considers that the conditions in Annexure E of the policy are met, will issue a 'letter of comfort'.

Final immunity would only be granted prior to the commencement of a prosecution of another individual(s) for the alleged misconduct, and only then if certain conditions are met. These conditions include:

  • providing ongoing, full cooperation during the investigation
  • appearing as a witness for the prosecution as and when requested in any proceedings against the other participants
  • giving truthful, accurate and complete evidence.

Immunity may be revoked

Importantly, a grant of conditional or final immunity from both civil or criminal proceedings may be revoked if the conditions of immunity are breached.

[Sources: ASIC media release 24/02/2021; ASIC immunity policy; ASIC Immunity Policy FAQs, Request for marker form; INFO 172 Cooperating with ASIC]

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