On 24 February 2021, ASIC announced its new immunity policy for market misconduct.
The policy offers immunity to individuals from the market misconduct provisions in Part 7.10 of the Corporations Act 2001 (Cth) ('the Act') when certain pre-conditions are met.
Eligibility: Who qualifies?
The policy appears to be designed to encourage whistle-blowing by employees against their companies. It only applies to individuals. It does not apply to corporate entities.
To qualify, the discloser must admit involvement in the misconduct but must not have instigated or coerced others to participate. The discloser must also be the first person to report the contravention to ASIC before an investigation into the misconduct has commenced and must co-operate in any subsequent ASIC investigation and court proceedings.
Scope
The policy applies only to immunity from criminal prosecution or civil penalties under Part 7.10 of the Act, concerning market misconduct and other prohibited conduct such as insider trading. It does not extend to any other provisions of the Act or the Australian Securities and Investment Commission Act 2001 (Cth). For example, there is no immunity for breaches of directors’ duties, continuous disclosure, takeovers or unregistered managed investment schemes. It also does not apply to administrative proceedings such as applications for disqualification or cancellations of an AFSL in relation to market misconduct or damages claims.
Market misconduct offences have always been particularly difficult to detect and prosecute. The new policy provides more concrete benefits for cooperation with ASIC which will hopefully encourage more individuals to come forward.
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