Apply within: ASIC requests applications from individuals seeking immunity from serious market misconduct
In a move that may come as a surprise to many, the Australian Securities and Investments Commission (ASIC) has released an immunity policy available to individuals who think they may have contravened certain financial market misconduct provisions in the Corporations Act 2001 (Cth) (Corporations Act).
Part 7.10 of the Corporations Act includes market misconduct offences, including market manipulation, insider trading and dishonest conduct in the course of carrying on a financial services business.
The new immunity policy (which was announced without prior notice to the market) will permit an individual to seek immunity from civil penalty and criminal proceedings, but only where the contravention involves at least one other person and where the applicant intends to cooperate with ASIC in relation to its investigation and any related court proceedings. The individual seeking immunity must not have been the instigator of the misconduct and must not have coerced any other person to engage, participate or be involved in the misconduct. Applications for civil immunity will be granted by ASIC, whilst the Commonwealth Director of Public Prosecutions (CDPP) – which is Australia's independent prosecutor of federal crimes – will be responsible for grants of criminal immunity.
ASIC's approach provides an interesting contrast to the established immunity regime administered by the Australian Competition and Consumer Commission (ACCC) in relation to cartel conduct. The general concept and procedure is similar – both policies are first come first served (such that later applicants will not be able to take advantage of the immunity, regardless of whether they are willing to cooperate with any subsequent investigation and enforcement proceedings), require an admission of misconduct, and use a 'marker' system whereby the applicant can request a marker to preserve their 'first-in' status on a hypothetical or anonymous basis, for a limited period, to allow the applicant to gather the information necessary to further consider the issue and decide whether to commit to the application for immunity. ASIC's process also contemplates the grant of conditional immunity (by ASIC, in civil proceedings) or a letter of comfort (by the CDPP, in criminal proceedings), both in advance of a grant of final immunity.
However, in contrast to the ACCC's immunity policy, ASIC will only consider applications from individuals (and not corporations), which will inevitably create tensions for employment relationships and raise questions about an employer's ability to control or monitor the information provided by an employee who approaches ASIC seeking immunity. While ASIC makes clear that it will use its 'best endeavours' to protect any confidential information provided by an immunity applicant, the practical reality of an enforcement investigation and subsequent proceedings will limit the ability of an immunity applicant to remain anonymous.
We are continuing to monitor developments in relation to ASIC's immunity policy and will provide a more detailed briefing in due course.