On 24 February 2021, ASIC released a new Immunity Policy for certain contraventions of the Corporations Act 2001 (Cth) (Corporations Act). These contraventions include serious offences such as market manipulation, false trading, market rigging, insider trading, dishonest conduct or misleading and deceptive conduct in the course of carrying on a financial services business, under Pt 7.10 of the Corporations Act.
The policy is designed to assist ASIC in identifying and taking enforcement action against specific markets and financial services breaches of the law, as well as strengthening ASIC’s enforcement toolkit. Enforcement tools available to ASIC include punitive action, protective action (such as disqualifications from practice or public warnings), preservation of assets, compensation and negotiated resolution. Further details on ASIC’s approach to enforcement can be found in ASIC Information Sheet 151.
ASIC Commissioner Sean Hughes commented that “ASIC continues to develop and implement new tools to combat and detect misconduct. The Immunity Policy enhances ASIC’s ability to identify and take enforcement action against complex markets and financial services contraventions.”
Individuals found to have contravened prohibitions in Pt 7.10 of the Corporations Act can face up to 15 years in prison and be fined up to $1 million or, if the court can determine the benefit derived from the contravention, up to 3 times the benefit’s value.
Details on the new policy
Under the new Immunity Policy, an individual who has engaged with others to manipulate the market, commit insider trading or engage in dishonest conduct when operating a financial services business, can, in certain circumstances, seek immunity from both civil penalty and criminal proceedings.
ASIC’s new policy is designed for individuals who:
• believe that they may have contravened, with at least one other person, a provision in Pt 7.10 of the Corporations Act,
• wish to apply for immunity from civil penalty or criminal proceedings, and
• intend to fully cooperate with ASIC in relation to ASIC’s investigation process and any subsequent court proceedings regarding the contravention.
ASIC is responsible for granting civil immunity, whilst the Commonwealth Director of Public Prosecutions (CDPP) is responsible for granting criminal immunity. ASIC will work closely with the CDPP on any applications for criminal immunity. The CDPP, in determining whether to grant immunity from criminal proceedings, exercises independent discretion, and is guided by the principles as set out in the Prosecution Policy of the Commonwealth, as well as ASIC’s recommendations.
Immunity is granted subject to conditions (conditional immunity). Those conditions include:
(a) the applicant (seeking immunity) must not have coerced any other person(s) to participate in the misconduct,
(b) the applicant is willing to self-report the misconduct to ASIC, and
(c) the applicant fully cooperates with ASIC by providing required information to be used in ASIC’s investigation into the misconduct, and any subsequent court proceedings.
How to apply for immunity
Applications for immunity under ASIC’s new policy are only available to individuals, not corporations. ASIC will not provide immunity for any administrative actions (such as disqualification from managing a corporation or the revocation of a licence) or compensation actions (such as seeking to recover damages or property). Immunity is also only available to the first individual who satisfies the immunity criteria and reports the alleged misconduct to ASIC prior to the commencement of an investigation into the allegations. The rationale behind this is to encourage parties to apply for immunity as soon as possible. If the applicant satisfies this criteria, ASIC will issue a “marker” for the particular conduct in question; a marker confirms that the applicant is the first person to approach ASIC for immunity in the particular circumstances. An individual must also have ceased all involvement in the alleged misconduct in order to be considered for immunity.
The criteria for immunity are as follows:
(a) the applicant has been involved in conduct which may contravene a provision of Pt 7.10 of the Corporations Act (misconduct)
(b) the applicant admits to the misconduct
(c) the applicant is one of 2 or more persons involved in the misconduct
(d) the applicant has not coerced any other person(s) to engage, participate or be involved in the misconduct
(e) the applicant is the first person to apply for immunity in respect of the misconduct (marker)
(f) the applicant was not the instigator of the misconduct
(g) the applicant has ceased their involvement in the misconduct
(h) ASIC has not yet commenced an investigation in respect of the misconduct when the applicant’s disclosure is made
(i) the applicant has provided full, frank and truthful disclosure and has cooperated fully and expeditiously while making the application and has undertaken to continue to do so throughout ASIC’s investigation and any subsequent court proceedings.
Individuals who fail to satisfy the immunity criteria are still encouraged to cooperate with ASIC and will be given due credit for any cooperation received. For example, any cooperation provided by an individual will be considered by ASIC in determining whether to take administrative action against that individual. Further information on cooperating with ASIC can be found in ASIC Information Sheet 172.
Applicants are encouraged to seek immunity as soon as they suspect any misconduct even if they are uncertain if the suspected misconduct is illegal. Applicants are required to keep immunity applications confidential, unless they have the written consent of ASIC or are otherwise required by law to disclose their application. This ensures that the targets of ASIC’s investigation do not become prematurely aware of the investigation and hence protects the integrity of the process and ensures that vital evidence is preserved.
Applicants are required to provide “full, frank and truthful disclosure” to ASIC and to cooperate with ASIC “fully and expeditiously … on a continuous and proactive basis”. For example, applicants must not understate their role, or overstate the role of any other participants in the alleged misconduct. Applicants must seek to preserve all evidence of the alleged misconduct and provide this evidence to ASIC.
In relation to civil penalty proceedings, ASIC will grant conditional immunity or final immunity. Conditional immunity is the initial immunity from civil penalty proceedings which ASIC grants if the applicant has satisfied the criteria for immunity and are cooperating with ASIC’s investigation.
Unless specified, a grant of conditional immunity is ongoing until final immunity is granted, or the application is withdrawn or revoked.
Conditional immunity will become final immunity at the conclusion of any proceedings, including any appeal proceedings, provided the applicant does not breach any conditions of immunity and maintains their eligibility under the Immunity Policy. This requires the applicant to:
(a) maintain eligibility for conditional immunity,
(b) provide full, frank and truthful disclosure and cooperate fully and expeditiously throughout the ASIC investigation and any subsequent proceedings,
(c) maintain confidentiality regarding their status as an immunity applicant unless required to disclose by law or with the written consent of ASIC,
(d) forfeit the profits of any wrongdoing, and
(e) make restitution to the victims of any wrongdoing, if ASIC considers it appropriate.
ASIC may revoke any conditional immunity under certain circumstances. For example, if ASIC suspects that the applicant has breached any conditions of immunity, including by failing to cooperate.
If the CDPP is engaged to consider criminal immunity, the CDPP may first issue the applicant a “letter of comfort” to the effect that the CDPP intends to grant the applicant criminal immunity.
An application for immunity can be made by:
• Completing ASIC’s online form,
• Contacting the ASIC immunity policy hotline on + 612 9911 5008, or
• Emailing ASIC at [email protected]
The applicant is required to provide ASIC with a detailed description of the misconduct, including details of the parties involved and the evidence available. This detailed description is known as a “proffer”.
ASIC will review its Immunity Policy at least every 2 years.
A list of frequently asked questions on ASIC’s new Immunity Policy can be found on the ASIC website
Sources: ASIC Immunity Policy, February 2021, accessed 24 February 2021.
ASIC, 21-030MR ASIC launches immunity policy for market misconduct offences, [media release], 24 February 2021, accessed 24 February 2021.
CDPP, Prosecution Policy of the Commonwealth, accessed 24 February 2021.