More muscular ASIC – a cautionary tale in dealing with ASIC compliance requirements

ASIC’s more muscular enforcement approach, including towards lower level legal contraventions, has been confirmed by the recent sentencing of a mortgage broker for providing false information to ASIC.

On 23 March 2020, the NSW Local Court sentenced mortgage broker Hermann Gao to a 12 month good behaviour bond without conviction for providing false information to ASIC.  In 2017, Mr Gao completed an annual compliance certificate to ASIC stating that he, as the ‘fit and proper person’ for his entity, had not had his accreditation cancelled or suspended by a lender. In fact, approximately 12 months earlier, ANZ, a lender, had suspended his accreditation.

The matter was prosecuted by the Director of Public Prosecutions on behalf of ASIC.

Mr Gao pleaded guilty to failing to take reasonable steps to ensure he did not make a false statement to ASIC, in contravention of s 225(6) of the National Consumer Credit Protection Act 2009.

At this time, a copy of the sentencing remarks of the Judge of the Local Court have not been published and given that the Local Court only publishes limited judgments each year, it may never be.

Mr Gao’s case presents a cautionary tale for those dealing with ASIC, even on seemingly routine compliance matters.

The referral to and prosecution by the DPP of this offence is a clear indication of the new, more muscular approach to enforcement being taken by ASIC.  The fact that ASIC and the DPP have pursued criminal prosecution of conduct occurring in 2016 to prosecution in 2021 is an example of ASIC’s willingness to prosecute matters which may, once upon a time, have been resolved by way of undertakings or other measures, or not at all.

If you deal with ASIC as part of your professional role, be sure to keep Mr Gao’s situation in mind when disclosing any information, no matter how routine.

If you are concerned about a past statement, or have been requested to produce documents or attend an interview pursuant to a compulsory power, get in touch today. Mackay Chapman are expert regulatory lawyers with extensive experience dealing with ASIC.

Full details are available in ASIC’s Media Release 21-057 (https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-057mr-former-mortgage-broker-sentenced-to-a-12-month-good-behaviour-bond-for-failing-to-take-reasonable-steps-to-ensure-that-he-did-not-make-a-false-statement-to-asic/)

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