Coming Clean: ASIC Offers Restricted Immunity for Market Misconduct

ASIC have announced the commencement of a novel immunity policy for individuals who contravene the market misconduct and related provisions in Part 7.10 of the Corporations Act. The policy outlines ASIC’s intention to provide conditional immunity for offences related to market manipulation, insider trading, and dishonest or deceptive conduct.

The Australian Securities & Investments Commission (ASIC) have announced the commencement of a novel immunity policy for individuals who contravene the market misconduct and related provisions in Part 7.10 of the Corporations Act. The policy outlines ASIC’s intention to provide conditional immunity for offences related to market manipulation, insider trading, and dishonest or deceptive conduct. The immunity policy will operate to protect individuals from both civil penalty and criminal proceedings, however the circumstances in which immunity may be sought are limited.

What offences does the immunity apply to?

The immunity policy only applies to disclosures related to the market misconduct offences in Part 7.10 of the Corporations Act, including:

• insider trading;
• market manipulation;
• false trading and market rigging;
• false or misleading statements in relation to financial products;
• dissemination of information on illegal transactions;
• dishonest conduct; and
• deceptively inducing persons to deal in financial products.

Who is eligible for protection?

An individual who is the first to disclose misconduct associated with one of the above offences that they (and at least one other person) are, or have been involved with, may be eligible for immunity. There are however several further significant qualifying factors, including that ASIC has not already commenced investigations into the conduct and were not otherwise aware of the potential offence prior to the individual’s disclosure. Furthermore, a person will only be eligible for immunity if they did not instigate, nor coerce others to participate in, the relevant misconduct.

The policy is also intended to reinforce ASIC’s optimistic position that all individuals should engage and cooperate with ASIC’s investigations where possible, and it recommends individuals come forward even if they are involved in the misconduct but are not eligible for immunity.

What does immunity protect me from?

This immunity may cover both criminal and civil proceedings, with ASIC committed to providing immunity from civil proceedings. ASIC has also cooperated with the Commonwealth Director of Public Prosecutions (DPP) who are similarly engaged to provide immunity from criminal proceedings in relation to the same offences. It is expected that ASIC will also make a recommendation that the DPP do not commence criminal proceedings in relation to the conduct if the individual is captured by the ASIC policy, however it is ultimately only the DPP that can grant that immunity. It is important to note however, that the policy will not prevent parties other than ASIC from seeking any kind of action, and does not protect disclosers from administrative or compensation proceedings. These include actions such as disqualification from management of a corporation, revocation of a license, or compensation proceedings brought by victims of the alleged misconduct.

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