Strategic Regulation and Asic Enforcement Patterns: Results of an Empirical Study

Abstract

This article 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 1997–99. ASIC is responsible for enforcing company and financial services laws in Australia. The survey explores the extent to which the enforcement activities of ASIC 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 punishes wrongdoing and secures 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. The use of these theories to gain insights into corporate regulation in Australia facilitates understanding of regulatory enforcement processes beyond the traditional paradigms of occupational health and safety and environmental regulation. The article 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. It concludes that the predominant use of penal enforcement activities and sanctions within the dataset of ASIC court-based enforcement reflects a traditional conception of the role of court enforcement in legal regulation as a “last resort” strategy. The study also highlights the reality 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.