The Use of Infringement Notices by ASIC for Alleged Continuous Disclosure Contraventions: Trends and Analysis

Abstract

The Australian Securities and Investments Commission (ASIC) has several enforcement options available to it where a company breaches its continuous disclosure obligations by not promptly disclosing price sensitive information. The most recent enforcement option made available to ASIC is the use of infringement notices. Infringement notices are designed to be used for less serious contraventions of continuous disclosure obligations. ASIC can issue an infringement notice where it believes a company has not complied with its continuous disclosure obligations. The notice specifies a financial penalty to be paid by the company and the company can choose to comply with the notice by paying the penalty or the company can choose not to comply in which case ASIC may take other enforcement action. This paper reports the results of the first detailed empirical study of ASIC’s use of infringement notices since they were introduced in 2004. One of the findings is that although infringement notices were introduced on the basis they would be a fast remedy, this objective has not been achieved. On average, ASIC takes almost 250 days from the time of an alleged contravention to the issuance of an infringement notice. The authors also compare ASIC’s use of infringement notices with other enforcement measures available to ASIC for breach of continuous disclosure obligations. These measures include enforceable undertakings, civil penalty proceedings and criminal penalty proceedings.