ASIC Enforcement Patterns

Abstract

This paper reports the findings of the first detailed empirical survey of court-based enforcement activities by the regulator of Australian corporate and financial services law, the Australian Securities and Investments Commission (ASIC), during the years 1997 to 1999. The paper seeks to determine whether those activities are consistent with the findings of past sociological studies of legal regulation and enforcement. Enforcement includes all the activities by which ASIC investigates possible breaches of the laws it administers, takes action to remedy those breaches and/or to punish wrongdoing and secure compliance. Sociological theories contend that the effectiveness of laws as forms of regulation depend on the process by which those laws are received, interpreted and responded to by the participants in the regulatory process. This paper contributes to existing literature by providing an empirical study of one example of economic regulation in Australia. It interrogates three aspects of ASIC court enforcement: the characteristics of the participants in the regulatory process apart from ASIC; the types of enforcement activity undertaken by ASIC and the legislation applied in those activities; and the outcomes of ASIC enforcement activities. The paper concludes that trends in ASIC court enforcement are broadly consistent with cited past sociological studies. In particular, the predominant use of penal enforcement activities and sanctions by ASIC during the study period reflects a traditional conception of the role of court enforcement in legal regulation as a last resort strategy. The study also reveals that the majority of enforcement activities in the dataset concern breaches of mandatory, socially oriented or ethically-based laws by regulatees in circumstances where their behaviour is widely regarded as undesirable.

Keywords: Australia, Australian Securities and Investments Commission, enforcement, regulator, enforcement strategies, court, litigation

JEL Classification: K2, K20, K22