Australian Securities and Investments Commission

Purpose The purpose of this paper is to examine the relationship between enforcement and compliance and to report on the results of an empirical study that assesses the impact of enforcement action by the Australian Securities and Investments Commission (ASIC) on the subsequent compliance by violators. Design/methodology/approach Following an extensive literature review, a sample of 50 similar complaints made to ASIC during the 2005/2006 financial year, were selected and grouped into two samples. The first sample, described as the enforcement sample, comprised of complaints that had been resourced for investigation by ASIC, and the second sample, described as the non‐enforcement sample, comprised of complaints that had not been resourced for investigation. An analysis was conducted to compare how many subsequent complaints had been received by ASIC in the following three years against members of the two samples. Findings The empirical evidence of the decrease in subsequent complaints against corporate violators subject to enforcement action clearly supports the argument that enforcement action does have an impact on corporate compliance of those violators. However, it has to be acknowledged that differences in rates of subsequent violation still do not guarantee that there is a cause and effect relationship between compliance and enforcement, as it is possible enforcement action may have resulted in violators becoming better at avoiding detection and complaint. Research limitations/implications The samples were limited to complaints identified in the 2005/2006 year and only taken from two of ASIC's five regulatory categories, so caution is required when interpreting and making generalisations from the results. Only three years of subsequent complaints were examined so the study was limited to the examination of relatively short‐term effects of enforcement action. Practical implications Corporate regulators such as ASIC now need to obtain and examine qualitative data from violators and potential violators to gain insights into their actions and motivations after investigation and enforcement actions. This may enable regulators to better understand the impact on violators themselves and the extent to which media reporting of enforcement action may have a demonstration effect on potential violators. Originality/value The paper provides valuable empirical evidence of the influence of enforcement on compliance, which should be of interest to corporate regulators and those interested in regulation and corporate governance.

Abstract The value‐growth effect is one of the most pervasive patterns in stock prices. In this study, the ability of four proxies for value‐growth, book‐to‐market, sales‐to‐price, earnings‐to‐price and cash‐flow‐to‐price to explain equity returns is analysed. The findings show that in aggregate, book‐to‐market best explains cross‐sectional variation in Australian equity returns, which in isolation suggests that it is the superior proxy for value‐growth. The analysis is taken further and the value‐growth effect is examined separately in positive and negative earnings firms. After segregating firms, it is found that in the negative earnings sample, book‐to‐market is the best value‐growth proxy and in the positive earnings sample, cash‐flow‐to‐price has the highest level of significance and is thus the superior value‐growth proxy. The economic significance of this result is telling, as the firms that report positive earnings are much larger than those that report negative earnings.

A speech by Greg Medcraft, Chairman, Australian Securities and Investments Commission (ASIC), Thomson Reuters 4th Annual Australian Regulatory Summit (Sydney, New South Wales,) 21 June 2016.

Explanations of cooperation between law enforcement agencies have primarily relied upon Old Boy Network' arguments. These are insufficient in an era which continues to juggle the conflicting pressures of traditional rights with the intrusive capabilities of Information Technology. This article draws expressly on Bob Hoogenboom's concept of ‘grey policing’ and constructs a structural understanding of Australian agency cooperation. In so doing it analyses the inherent tensions associated with the investigative need for in-depth and timely information, legal protection and agency organisational goals. Recognition is also given to the influence of contemporary political initiatives relating to organised crime and privacy. By highlighting the contemporary moves to increased data-matching it is argued that the trend towards intensive cooperation between police and other agencies has been established. — The trend towards what Hoogenboom refers to as the ‘police complex’. These findings draw attention to the merits and social harms associated with greater agency cooperation.

In Australia financial literacy work nationally is guided by the principles of the NationalFinancial Literacy Strategy, a collaborative multi-agency strategy coordinated by theAustralian Securities and Investments Commission (ASIC). This provides a framework for manyagencies and organisations to work in partnership to develop and deliver initiatives to improvethe financial literacy of all Australians. This article highlights the thinking behind the strategy,presents examples of the strategy in action, and foreshadows next steps. Above all, it arguesthat the challenges of improving financial literacy are best shared – i.e. that a collaborativeapproach between sectors and countries remains the most effective way forward

It has been clearly established in the common law world for a long time that foreign penal and revenue laws are unenforceable in a forum court. Dicey and Morris state the rule thus: “English courts have no jurisdiction to entertain an action for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State”. While the first two categories of foreign laws are well established, there is considerable doubtt outside of Australiat as to whether the third residual category of “public laws” can be justified. The High Court in Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (which will be referred to in this article as “ Spycatcher ”), was called on to decide whether it would allow a claim of the British Government to be heard in Australia. One of the arguments raised against allowing the action to go ahead was that it would potentially involve an Australian court enforcing a foreign penalt revenue or other public law. In the course of rendering its decisiont the Court reformulated the principles stated above into a broader principle. The Court stated that Australian courts will not enforce the “governmental interests” of a foreign sovereign. By this, the Court meant “the interests of a foreign sovereign which arise from the exercise of certain powers peculiar to government”. This rule or principle will be referred to, in this paper, as the “non-enforcement principle”.

The ‘proscriptive’ (negative) and ‘prescriptive’ (positive) dichotomy of fiduciary duties has attracted great contemporary interest, as the High Court has held that fiduciary duties are only proscriptive. The ‘dichotomy’ and ‘proscriptive limitation’ have been debated by scholars and judges. This article provides some perspective to the debate. It suggests that the proscriptive limitation is misleading because fiduciary duties are dynamic and unfixed, and because some fiduciary duties are positive. It also suggests that classifying duties within the dichotomy is unnecessary, overly complex, and potentially productive of error because it detracts from the proper focus of the fiduciary inquiry.