Regulation: ASIC bound by gag orders
ASIC's horrible end to 2009 continued with a decision handed down on 23rd December but announced by ASIC only today. ASIC had applied for an order to overturn a gag order where a challenge had been mounted to one of the Commission's administrative orders. The Court rejected ASIC's application.
The case came before the full bench of the Federal Court of Australia and dismissed ASIC's proceedings challenging the Administrative Appeals Tribunal’s (AAT) power to interfere with its duty to publicise its enforcement activities while a review of its disqualification decision is under way.
ASIC says that, if it makes an order banning someone from providing financial services it is in the interests of the public that that information is made available as quickly as possible.
And ASIC pointed out that, if a banning order is made under the Corporations Act, the information is made public immediately. This, the Commission argued, is a discrepancy.
The Court agreed with this latter contention - but considered that an ASIC banning order relating to financial services directly affects the livelihood of the subject and that, where a review is under way, he should not be prejudiced.
The Court has a point: there is no way back for a financial adviser or a business which is publicised as banned from providing services, and the reasons for doing so. In reality, people remember the bad news - they will not remember a later note, which is likely to get less profile in the media, that says the ban is not in effect. In any case, there will always be a suspicion that there is no smoke without fire.
ASIC appealed against confidentiality orders put in place by the AAT, which stop ASIC from naming the managing director of an investments and financial services company from providing financial services for four years. The man is known by the pseudonym ‘XQZT’ in the proceedings before the ATT.
ASIC is now considering whether to appeal to the High Court.
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