The crashes mentioned in ASIC MAIN Index did not happen without reason. In every case ASIC received warnings, but failed to take any action. In the cases of ACR and Fincorp each received several stop orders but failed to take punitive action. In the case of Fincorp,a court forced Fincorp to repay money to investors because of a "deliberately false and misleading prospectus". Even this was insufficient for ASIC to take punitive action.

 

Abbreviated History gives several examples of opportunities where ASIC could have take action after condoning the use of promissory notes in the Westpoint Mezzanine Model on the basis they fell outside the Corporations Act. The net result of this was that every Westpoint Mezzanine investor put their money in a managed illegal Managed Investment Scheme (MIS). That statement is not quite technically correct. Although the WA Supreme Court found the schemes were MIS's, which had never been presented to ASIC for examination as legal MIS's, they were not illegal as ASIC had never taken steps to identify them as illegal! ASIC had that opportunity in 2004 when Judge commented that he had been asked if the Mezzanine Schemes were debenture base, answered they were not, but had ASIC asked if they MIS's he would have answered yes. In period up to the collapse of Westpoint in Novemeber 2005, investors poured another $100 million into Westpoint.

 

ASIC controls the planners. Under law, if a planner, by accident or design, misleads an investor then they are responsible for the investor's loss. In a democracy, where all citizens have the same legal standing, then one would expect the same law applies equally to planners and ASIC. As in the book 1984 all entities are not equal. ASIC is a suable body - but one can only sue if the can prove malfeasance.

THE LATTER IS A KEY POINT AS TO WHY ASIC HAS BEEN SO LAX OVER THE YEARS. THEY KNOW WHATEVER HAPPENS THE GOVERNMENT OF THE DAY WILL PROTECT THEM. The "do noting/couldn't care less" culture within ASIC is the direct result. In any occupation, accountability helps preserves standards.

In recent times we have numerous collapses of substantial companies. In may, it is difficult to understand the collapses on examining the balance sheets of the past twelve months. In addition to bad management, there have been many instances of possible illegal activity seen. To date, there have been projected inquiries, but very little in the way of prosecutions.

As a legislator, ASIC is in a unique position to determine which laws need amending to do its job. Not surprisingly, it is difficult to find any occasion on which they have gone back to Parliament with a request for change.

That the ASX, which is a company relying on profit, is co-regulator defies explanation given the obvious conflict of interest.

On matters of conflict of interest, that we have two regulators raises problems of responsibilty. Clearly, the Australian "twin peaks" is not working

Senator_Sherry_promised_an_open inquiry in a letter to me if Labor came to power. They have come to power, and that has not happened. We urgently need a Royal Commission, with the widest possible powers, into the Australian Financial Sytem.