ASIC Enforcement wrap: October 2022 | Be Green and Be Clean, ASIC Takes First Action Against “Greenwashing”

ASIC’s enforcement outcomes in October see continued success in pursuing civil penalty outcomes. ASIC has also taken it’s first ever action against “greenwashing”, an issue identified as one of ASIC’s enforcement priorities for 2023.  We provide below a quantitative summary of enforcement actions, so you can be aware ASIC’s recent areas of focus and outcomes.

Shortly after the end of October 2022 ASIC announced its enforcement priorities for 2023.  Keep an eye out for a detailed article on these priorities and what they can tell us about the year ahead.

October in summary – enforcement actions and outcomes

Administrative action:

• Financial Services Bannings – Two directors were banned for reasons such as refusal or failure to give effect to AFCA determinations, and ASIC finding that the director lacked the honesty, integrity, professionalism and sound judgement expected of someone working in the financial services industry.
• Director Disqualifications – Two individuals involving 5 failed companies, owing a total of over $16 million.
• Interim Stop Order – Two companies prevented from distributing funds because of non-compliant target market determinations, with fund assets consisting of crypto currency, loans, credit, leases and other fixed-interest financial assets.
• Infringement Notice – Four notices were issued against a listed energy company for “greenwashing”, with a total payment of $53,280. ASIC alleges that the listed company made false or misleading sustainability-related statements to ASX in October 2021. This is the first ever action taken by ASIC against greenwashing.
• AFS License Cancellation – Two licensees had their AFS license cancelled for reasons such as no longer carrying on a services business, failure to maintain AFCA membership and failure to lodge financial statements.

Criminal:

• Charges Laid – against two defendants involving offenses such as making a false document to obtain a financial advantage, dishonestly using their position as a company officer and failing to comply with a notice issued by ASIC.
• Guilty Pleas – made by two defendants, involving offenses such as managing companies while disqualified, and fraud involving false representations to an investor about the claimed energy efficiencies produced by air conditioning system sold.
• Charges Withdrawn – against one defendant, involving a charge of theft against an ASX-listed mining exploration company.

Civil Action:

• Penalties Imposed – 

• Of $900,000 against a Timeshare company, for giving advice that was not in the consumer’s best interests and not appropriate to their circumstances.
• Of $650,000 against a listed company, for contravening continuous disclosure laws by failing to disclose a likely profit writeback.
• Of $27 million against an AFS licensee which was a former subsidiary of the Commonwealth Bank of Australia, for systematic compliance failures, including overcharging brokerage fees totalling over $4.3 million. It is the largest ever penalty handed down for breaches of Market Integrity Rules.
• Of $25 million against ANZ Bank, for failure to provide certain benefits it had agreed to give customers with offset transaction accounts or under a ‘Breakfree’ package.

• Penalty Proceedings Commenced – 

• Against Latitude Finance and Harvey Norman for allegedly misleading interest free advertising for purchases at Harvey Norman.
• Against a financial services company for making false, misleading or deceptive representations and engaging in unlicensed conduct in relation to a crypto payment facility that it established and promoted itself.

• Appeals – 

• Mayfair 101 Group companies unsuccessfully sought to overturn the findings of misleading or deceptive advertising and a $30 million penalty at first instance. The Appellants did not appear at the first instance.
• ASIC appealed the Federal Court’s decision to dismiss ASIC’s proceedings alleging that Colonial First State Investments Limited (Colonial) and Commonwealth Bank of Australia (CBA) breached conflicted remuneration laws. 

It’s a short wrap this month with lots happening in November and with the announcement of the ASIC Enforcement Priorities.  Keep an eye our for our further content.

If any of the above is relevant to you or you want to know more, please feel free to get in touch.

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The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.

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