The Australian Securities and Investment Commission (ASIC) is about to receive much greater investigative and punitive powers in relation to market-related offences, following a Federal Government announcement Thursday.
The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, said the proposals would allow ASIC to impose much tougher penalties on individuals and corporations engaging in corporate misconduct, including insider trading, market manipulation and false trading.
"There are some people who regard insider trading and these other offences as being victimless crimes. They are not victimless crimes. People who engage in market manipulation and insider trading profit at the expense of others," said Bowen.
Under the proposed changes, the penalty for individual insider trading would increase from $220,000 to $500,000, or three times the profit made or loss avoided, whichever is greater. The penalty for corporations would increase from $1 million to $5 million, or three times the profit made or loss avoided, or 10 per cent of the company's turnover during the relevant period, whichever is greater.
Potential maximum prison terms would be doubled, with offenders facing as many as 10 years in prison if convicted.
"The increased penalty provisions send a clear message to those who seek to profit from these types of market offences that behaviour that undermines the proper functioning of our financial markets will not be tolerated," Bowen said.
The proposed changes would also significantly increase ASIC's investigative powers, bringing them into line with other regulatory bodies such as the Australian Competition and Consumer Commission (ACCC).
Such powers would include the ability, by virtue of the court, to access telecommunication intercepts obtained by the federal police and dispense with the requirement to issue a notice to produce prior to enforcing a search warrant.
"These changes will ensure that ASIC is properly equipped to investigate and prosecute serious corporate misconduct which has the potential to cause significant harm to the economy and investors," Bowen said.
He also emphasised that he hoped the proposed changes would send a strong message of deterrence to those considering engaging in market manipulation.
"The penalties I'm announcing today are tough. The improvements to ASIC's investigatory powers are significant. We make no apologies for that. It's only fair to those people doing the right things," Bowen said.