i Sources of law
The primary source of securities law in Australia is the Corporations Act 2001 (Cth) (the Corporations Act), which covers matters such as members' rights and remedies, takeovers, continuous disclosure, fundraising and financial services and markets.
The Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) creates a number of bodies relevant to the regulation of securities markets, including the Australian Securities and Investments Commission (ASIC). The Act also imposes a number of statutory prohibitions applicable to financial services and markets.
Australia's main securities exchange is the Australian Securities Exchange (ASX). As a result, the ASX Listing Rules (governing the manner in which entities listed on the ASX must operate) and the various guidance notes supporting these rules are an important source of regulation.
ASIC supervises conduct on the ASX. Under the Corporations Act, ASIC promulgates and enforces 'market integrity rules', which impose obligations on market participants and operators.
ii Regulatory authorities
ASIC, as the securities regulator in Australia, is responsible for securities market supervision and enforcement. ASIC has administrative, civil and criminal enforcement powers.
ASIC's civil proceedings normally take the form of enforcement of 'civil penalty' provisions. Civil penalties are a hybrid sanction combining both civil and criminal remedies subject to the civil burden of proof. The regime provides a way of enforcing the law when it is not possible or appropriate to bring criminal actions against corporations and their officers. ASIC can also seek coercive civil relief from a court, for instance, to protect assets, compel compliance or to require a correction to a prior misleading statement.
In addition to seeking civil enforcement through the courts, ASIC is able to take administrative action, which includes suspension, cancellation or variation of an Australian Financial Services Licence, banning orders against individuals or accepting an enforceable undertaking (a form of negotiated administrative settlement).2
As part of its administrative jurisdiction, ASIC can refer matters involving alleged breaches of market integrity rules by market participants or operators to the Markets Disciplinary Panel (the Panel). The Panel is a peer-review body that operates, as far as is practicable, independently of ASIC and is capable of issuing infringement notices.3
ASIC's administrative powers also extend to issuing infringement notices to listed entities for breaches of their continuous disclosure obligations as an alternative to commencing civil penalty proceedings in less serious cases.4
The Office of the Commonwealth Director of Public Prosecutions (CDPP) prosecutes criminal breaches of securities laws. The CDPP is an independent prosecution service responsible for the prosecution of alleged offences against Commonwealth law. As most securities laws are Commonwealth laws, the CDPP is generally responsible for the prosecution of securities crimes. Although ASIC prosecutes some minor regulatory offences on its own behalf, it refers most criminal cases to the CDPP, which determines whether to commence criminal proceedings and prosecute any case that goes to trial.5
iii Common securities claims
Insider trading and market manipulation
Insider trading and market manipulation are prohibited under Australian law.6 Insider trading consists of trading in securities while in possession of non-public information that, if it were made public, a reasonable person would expect to have a material effect on the price or value of the securities. It is the possession of material non-public information that makes a person an insider. It is not necessary for the trader to be an insider in the sense of having a fiduciary or other relationship with the issuer of the securities. The application of the prohibitions on insider trading are broad, covering any financial product that is able to be traded on a financial market.
Market manipulation occurs when a person engages in activity that has or is likely to have the effect of creating or maintaining an artificial price for trading in financial products or on a financial market. As for what constitutes an artificial price, it is sufficient to show that the sole or dominant purpose of a trade was to create or maintain a particular price for those securities.7
The prohibitions on insider trading and market manipulation extend beyond equity securities markets. The application of the provisions is broad, covering any financial product that is able to be traded on a financial market.
Liability for misstatements and non-disclosure
Civil or criminal liability for either making statements relating to securities that are misleading or for failing to disclose information relating to securities in circumstances where disclosure is required can arise under a variety of statutory prohibitions.8 Although civil liability for losses resulting from a wrong committed in relation to securities disclosures can exist under common law and equity, statutory claims are generally more advantageous for prospective plaintiffs. In particular, a claim for statutory misleading or deceptive conduct generally depends on the effect or probable effect of the conduct rather than on the state of mind of, or lack of care by, the person engaging in the misleading or deceptive conduct.9
A listed issuer has a continuous disclosure obligation, which requires it to immediately notify the exchange of any information of which it is aware that a reasonable person would expect to have a material effect on the price or value of the issuer's securities.10
Breach of this obligation is often relied upon as a basis for the commencement of securities litigation, both by the regulator and by private litigants.
Secondary liability and gatekeepers
Civil liability for certain breaches of duty under the Corporations Act, including a company's continuous disclosure obligation, can extend to any party 'involved' in the contravention.11 Criminal liability can also extend to accomplices.12 Similarly, where conduct involves the breach of a director or officer's duties to the company of care, diligence, good faith or fidelity, that director or officer and anyone involved in the contravention will be liable.13 This includes liability for a civil penalty from public enforcement and for damages from a private action.
Directors, auditors and professional advisers are viewed by ASIC as 'gatekeepers', in the sense that they are an independent corporate monitor capable of 'closing the gate' on wrongdoing. In this respect, gatekeepers are expected to play an almost co-regulatory role with ASIC. For this reason, ASIC has been clear that it will take enforcement action against gatekeepers who do not take their responsibilities seriously and discharge their duties carefully where this has permitted wrongdoing to occur.14
ASIC has brought a number of high-profile civil penalty actions against directors, management and individual auditors for alleged breaches of duty in connection with corporate disclosure.15 Directors and auditors have also had to contribute to compensation for affected investors as a result of class actions or ASIC proceedings.16
II PRIVATE ENFORCEMENT
i Forms of action
In Australia, shareholder class actions17 are the most prevalent and significant type of private securities litigation, although securities litigation can also take the form of individual or derivative action.
Shareholder class actions
Shareholder class actions can be commenced via the opt-out representative procedure that exists in Australia under Commonwealth legislation18 and under the almost identical Victorian,19 New South Wales20 and Queensland21 legislation.22 A similar regime has been introduced in Western Australia through the Civil Procedure (Representative Proceedings) Bill 2019 (WA), following recommendations by the Law Reform Commission of Western Australia,23 but is yet to be enacted.
The most common causes of action relied upon are breach by a company of the continuous disclosure provisions of the Corporations Act24 and breach by a company of the misleading or deceptive conduct provisions of the Corporations Act and ASIC Act.25 These causes of action are often pleaded together.
Shareholders who suffer loss as a result of this corporate misconduct may bring an action for damages either individually or by way of a class action (the latter often being the more commercial option).26
A shareholder class action is typically brought by a representative party on behalf of a group of shareholders who have purchased shares in a listed company during a specified period. Typically, the representative party will allege that:
- the company was aware of material, price-sensitive information that it failed to disclose to the market;
- the failure to disclose caused the company's share price to trade on the market at an inflated price during the period of non-disclosure; and
- it and other group members acquired shares during the period of non-disclosure at an inflated price and, as a result, suffered loss by 'overpaying' for the shares they acquired.
The Australian third-party funding industry is well established. The majority of shareholder class actions in recent years have been funded by a third party (although there are exceptions). The industry has enjoyed significant growth, in particular since a 2006 High Court of Australia (the High Court) ruling that held that litigation funding was not an abuse of process27 and a 2007 Federal Court of Australia (the Federal Court) ruling that permitted a class to be defined by reference to whether members had signed a funding agreement, thus effectively permitting opt-in or 'closed' classes (and excluding 'free riders').28
A 2016 Federal Court ruling fostered growth in the litigation funding industry by confirming that the Court had the power to make a 'common fund' order under s 33ZF of the Federal Court of Australia Act.29 Under a common fund order, all claimants in a class action funded by a litigation funder would be required to contribute to the common fund out of any proceeds received (regardless of whether they had entered into the funding agreement), and that the contribution amount was to be determined by the Court, not the funder. This removed an obstacle for litigation funders who, prior to common fund orders, had to enter into separate funding agreements with every claimant to extract a commission. However, in December 2019, this position was overruled by the High Court of Australia, which held that the courts do not have power to make common fund orders under s 33ZF of the Federal Court of Australia Act (or equivalent provisions).30 See section V. i below for more detail on this decision.
Statutory derivative action
The Corporations Act provides individual shareholders with the right to bring a statutory derivative action on behalf of a company in respect of any cause of action that the company has.31 The action is commenced with the company as the plaintiff. Actions against one or more directors for breach of directors' duties are commonly brought as a derivative action by shareholders.32
Shareholder class actions
To commence a class action in the Federal Court, the following threshold criteria must be satisfied:
- seven or more persons must have claims against the same person or persons;
- the claims must be in respect of the same, similar or related circumstances; and
- the claims must give rise to a substantial common issue of law or fact.33
In circumstances where there are multiple respondents, every group member is not required to have a claim against each of the respondents to the proceeding.34 Further:
- one or more representative parties (known as the applicant) bring the action against a respondent on behalf of the entire group;
- there is no certification requirement;
- the consent of the group members is not required,35 and group members are not required to be individually identified; and
- before the trial of common issues, group members must be notified of the proceedings and have the right to opt out (any judgment will bind all group members who have not opted out).36
The threshold for commencing a class action is low and easy to satisfy. However, a respondent may bring an interlocutory application to challenge a class action for failing to meet the threshold criteria. A respondent may also challenge a class action on the basis that:
- the costs that would be incurred if the proceeding continued as a class action are likely to exceed the costs that would be incurred if each group member commenced separate proceedings;
- all the relief sought can be obtained by means of proceedings other than a class action;
- the class action will not provide an efficient and effective means of dealing with the claims of group members; or
- it is otherwise inappropriate for claims to be pursued by means of a class action.37
The Federal Court may also, of its own motion, order the discontinuance of the proceeding in these circumstances.38 A class action in the Federal Court progresses in the same way as any other Federal Court proceeding but with a number of procedural overlays. These include:
- certain notifications to group members;
- court approval for any settlement (see Section II.iii) and distribution regimes; and
- if settlement is not reached, trial of common issues and following the trial of common issues, the determination of individual claims (which may involve separate individual trials).39
In December 2019, the Federal Court introduced an updated general practice note on class actions (GPN-CA), which sets out the Court's approach to case management of class actions and representative proceedings. This includes:
- disclosure to the Court of competing class actions and the expectations of each party;
- the process by which class actions are allocated to a docket judge and, in appropriate cases, to a designated case management judge or a registrar, or both;
- case management procedures, including procedures to be adopted in situations where there are competing class actions;
- disclosure requirements relating to costs agreements and litigation funding agreements, which regulate disclosures to class members, the Court and other parties;
- guidance on communication with class members;40 and
- issues the Court will determine with competing class actions, including any matter relevant to the settling of a timetable for the efficient conduct of the competing class actions.
As group members are not parties to the class action proceeding, their role in the proceeding is generally passive until the conclusion of the trial of common issues.41 Accordingly, discovery is usually limited to documents in the possession, custody or control of the representative party. As such, attempts by respondents to seek information regarding the identity of group members and the quantum of their individual claims is an emerging feature of shareholder class actions in Australia. This information may be sought through several means, including requests for further and better particulars of the applicant's statement of claim, an application for discovery, or by agreement between the parties.42
Statutory derivative action
To commence a derivative action, an individual shareholder must obtain the leave of the court. Leave must be granted where the court is satisfied of the following matters:
- it is probable that the company will not itself bring, or take proper responsibility for, the proceeding;
- the applicant is acting in good faith;
- it is in the best interests of the company that the applicant be granted leave;
- there is a serious question to be tried; and
- either the applicant gave 14 days' notice of the application to the company or it is appropriate to grant leave even though the applicant did not give the required notice.43
Assuming that an applicant has obtained the leave of the court to bring a statutory derivative action, the usual Australian litigation procedure applies.
Shareholder class actions
Settlement of a class action in the Federal Court must be approved by the Court at a settlement approval hearing. Notice must be given to group members of the proposed settlement.44
In exercising its discretion to approve a settlement agreement, the Court performs a protective function in the interests of group members. Approval will only be granted to a settlement where the settlement is fair and reasonable having regard to the claims of the group members who will be bound by it (both as between the parties to the litigation and as between individual group members).45 The Court is unlikely to approve a proposed settlement that does not take into account the relative strengths and weaknesses of each individual group member's claim.46
Statutory derivative action
A statutory derivative action brought under the Corporations Act can only be settled or discontinued with the leave of the court.47 This aims to prevent the defendant and applicant from agreeing to settle the proceedings where it would not be in the best interests of the company (as may occur if the defendant provides a personal incentive, such as a monetary payment, to the applicant to settle).48
iv Damages and remedies
Shareholder class actions
To succeed in a shareholder class action seeking damages for breach of continuous disclosure obligations or misleading or deceptive conduct by a company, the applicant must show a causal connection between the loss suffered and the alleged misconduct. The loss must 'result from',49 or a person must suffer loss 'by',50 the conduct that has contravened the relevant statutory provisions.
In the context of Australian shareholder class actions, applicants have adopted two different theories to satisfy this requirement:
- applicants allege that they detrimentally relied on the misrepresentations or omissions of the company; or
- a 'mere inflation' approach or 'market-based' causation (which is based on elements of the US 'fraud on the market' theory), where applicants assert that they suffered loss by purchasing shares at a price that was artificially inflated as a result of the misrepresentations or omissions of the company. This approach does not require the applicant to plead that he or she actually read and relied on the disclosures or representations.
The appropriate test for causation in the context of a shareholder class action remains controversial.51 While the reliance-based approach is consistent with ordinary Australian principles of causation, most shareholder class action claims also plead market-based causation. However, market-based causation has received recent judicial support,52 and there now seems to be tentative judicial encouragement to its proponents, potentially signalling further cases that rely on an indirect causation argument.
In Australia, damages are generally limited to economic loss; punitive damages are not generally available.
It is likely an Australian court would calculate loss as being the difference between the price at which the shareholder acquired their interest and an alternative measure of the value of the security, such as its 'true' or 'market' value in the absence of the contravening conduct by the company.53 Shareholder class action claims traditionally plead several different loss methodologies.
Statutory derivative action
In the context of statutory derivative actions, the remedy available to the company depends upon the cause of action claimed in the proceedings. Where derivative proceedings allege a breach of a civil penalty provision of the Corporations Act (such as a breach of directors' duties), the company may apply for a statutory compensation order requiring the defendant to compensate the company for damage suffered as a result of the breach.54 In calculating the damage suffered for a breach of directors' duties, the court may include profits made by the director or any other person resulting from the breach.55
III PUBLIC ENFORCEMENT
i Forms of action
ASIC has a broad range of criminal, civil and administrative enforcement options available to it to address securities market misconduct, including:
- commencing criminal prosecutions or referring matters to the CDPP to commence a criminal prosecution;
- commencing civil proceedings for a pecuniary penalty;
- applying to the court for an extensive range of non-pecuniary remedies, including declarations of contravention, compensation orders and injunctions;
- intervening in other civil proceedings;
- administrative action, such as issuing an infringement notice, suspending, cancelling or varying an Australian Financial Services Licence, banning individuals, referring a matter to the Panel or accepting an enforceable undertaking; and
- reporting serious contraventions of the law to the Minister responsible for ASIC (currently the Treasurer), Australian Federal Police, the CEO of the Australian Criminal Intelligence Commission, the CDPP or a prescribed agency.56
Civil and criminal proceedings
ASIC's Office of Enforcement, established in 2019, is responsible for carrying out ASIC's key enforcement activities and is functionally separate from ASIC's regulatory teams.57 It is composed of two specialist enforcement teams – Markets Enforcement and Financial Services Enforcement – and an Enforcement Oversight Committee.58 ASIC's enforcement work has a core focus on deterrence, public denunciation and punishment.59
When considering whether to initiate civil proceedings, ASIC must be satisfied, after obtaining written legal advice, that it is the most suitable method of enforcement.60
ASIC has a unique information advantage when making this determination as compared to private litigants. ASIC has the ability to extensively investigate alleged contraventions before commencing enforcement action, using its broad information-gathering powers,61 which include the power to:
- issue notices to produce;62
- apply for search warrants; and
- conduct compelled witness examinations under oath (transcripts of which are admissible in certain civil proceedings).63
ASIC does not have the power to apply for warrants to intercept phone calls. However, it does have the power to apply for warrants to obtain stored telecommunications data from service providers.64 It may also conduct joint investigations into suspected insider trading and market manipulation offences with the Australian Federal Police, which does have the power to apply for warrants to intercept telecommunications.65 Since 18 February 2020, ASIC has also had the power to receive and use lawfully intercepted telecommunications information in investigating and prosecuting serious offences.66
In the context of compelled witness examinations and notices to produce, individuals cannot rely on the privilege against self-incrimination as a basis for refusing or failing to provide the information requested by ASIC. However, such information will generally be inadmissible as evidence in any criminal proceeding or proceeding for the imposition of a penalty against the individual.67 It should be noted that corporations are not protected by the privilege against self-incrimination.68
ASIC cannot compel the production of documents protected by legal professional privilege; however, ASIC may seek voluntary disclosure of privileged communications.69
If ASIC considers that it has sufficient evidence of a criminal offence and the circumstances of the matter warrant a criminal prosecution, it will normally refer the matter to the CDPP.70 ASIC will generally consider criminal action for offences involving serious conduct that is dishonest, intentional or reckless, even where there is a civil remedy available for the same conduct.71 The CDPP ultimately determines whether to commence a criminal prosecution.72
To ensure a fair trial, the CDPP is subject to higher disclosure obligations than parties to civil litigation. This generally includes informing the accused of:
- the case to be made against them;
- information relating to the credibility or reliability of prosecution witnesses; and
- information that has been gathered through the investigation but on which the prosecution does not intend to rely, or that runs counter to the prosecution case.73
At trial, the CDPP must meet the criminal standard of proof for each charge (beyond reasonable doubt).
In civil penalty proceedings, ASIC must first apply to the court for a declaration that the defendant has contravened a 'financial services civil penalty provision'.74 Following the declaration, ASIC can then pursue a pecuniary penalty order, which may be granted if the contravention:
- materially prejudices the interest of acquirers or disposers of the relevant security;
- materially prejudices the issuer of the relevant security or its members; or
- is serious.75
Civil actions only require proof on 'the balance of probabilities'. This lower threshold makes it easier for ASIC to obtain an enforcement outcome in civil cases.76
The court cannot make a declaration of contravention or order a pecuniary penalty if the defendant has already been convicted of an offence for substantially the same conduct.77 There is no reverse prohibition for criminal proceedings following a civil action, although evidence given in civil penalty proceedings is not admissible in subsequent criminal proceedings.78
Civil penalty and criminal prosecution of contraventions of securities laws may affect the outcome of private proceedings because ASIC regularly provides transcripts of its compelled examinations to class action law firms and liquidators,79 and findings of fact made by a court in a civil penalty proceeding may be used as evidence of that fact in certain private actions for damages.80
ASIC may issue an infringement notice to a listed entity for less serious breaches of its continuous disclosure obligations under the Corporations Act if it has reasonable grounds to believe the entity has contravened those obligations.81 The infringement notice will provide for the payment of a penalty.82
In March 2019, the infringement notice regime was expanded to include all strict and absolute liability offences in the Corporations Act, and certain other provisions.83
In determining whether to issue an infringement notice, ASIC will consider the relevant facts and circumstances of the matter, and generally have regard to the seriousness of the alleged breach and the view of the relevant market operator.84
ASIC will only issue an infringement notice in respect of breaches of continuous disclosure obligations after conducting a private hearing at which the entity may give evidence and make submissions.85 This requirement does not apply to the expanded infringement notice regime introduced in March 2019, but recipients of an infringement notice under that regime may apply to ASIC within 28 days to seek withdrawal of the notice.86
The entity can elect whether or not to comply with the infringement notice and pay the penalty. If the entity does comply, ASIC cannot commence civil or criminal proceedings against the entity (subject to certain exceptions),87 and the entity will not be regarded as having contravened the provision specified in the notice.88 However, ASIC will publish details of the notice and the entity's compliance.89 If the entity does not comply with the infringement notice, this fact will not ordinarily be published by ASIC. However, if ASIC commences proceedings against an entity following withdrawal of, or failure to comply with, a notice, ASIC will issue a media release on the fact of commencement and details of the outcome of the proceedings.90
In addition to the infringement notices described above:
- ASIC may issue an infringement notice if it believes on reasonable grounds that a person has breached certain consumer protection provisions in the ASIC Act or the National Consumer Credit Protection Act;91 and
- the Panel may issue an infringement notice to a market participant if it has reasonable grounds to believe that the market participant has breached the market integrity rules.92
Civil penalty proceedings brought by ASIC are in some instances settled out of court, with the parties subsequently approaching the court with an agreed statement of facts and 'agreed penalty', to request the penalty be converted into an order. In such instances, the court will generally accept a penalty that was within a 'permissible range' even if the court would have arrived at a different figure.93 While this practice has attracted judicial criticism,94 a series of judgments from the High Court have now confirmed that in civil penalty proceedings a court is not precluded from receiving and, if appropriate, accepting an agreed (or other) civil penalty submission.95 The High Court has observed that there is an important public policy involved in promoting predictability of outcomes in civil penalty proceedings and that 'the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and respondents'.96
However, recent case law demonstrates that courts will not always approve agreed settlements. In a widely reported 2018 decision, the Federal Court refused to approve a A$35 million settlement agreed between ASIC and a major Australian bank, in relation to breaches of Australia's responsible lending laws. The Court's key reason for declining to approve the agreement was that the parties did not agree on how or how many times the bank had contravened the National Consumer Credit Protection Act 2009 (Cth), which meant that the Court was unable to assess the reasonableness of the settlement.97
In criminal prosecutions, charge negotiation can take place at any stage.98 This may result in the defendant ultimately pleading guilty to fewer or lesser charges.99 However, criminal prosecutors are not permitted to make submissions to the sentencing judge on the specific sentencing result or the range within which it should fall.100
Following an investigation, ASIC may also be open to negotiating an enforceable undertaking, a form of administrative settlement that ASIC accepts as an alternative to civil or other administrative action.101 ASIC's willingness to accept enforceable undertakings has reduced considerably since it adopted a 'why not litigate?' approach to enforcement in October 2018 in the wake of the Financial Services Royal Commission.102
An enforceable undertaking is a very flexible enforcement outcome and may include:
- details of the misconduct;
- details of how the promisor will address the misconduct, such as through the implementation of monitoring and reporting mechanisms; and
- details of any agreed compensation to third parties or agreement to perform community services, such as funding an education programme.103
ASIC will require that the terms of the enforceable undertaking are publicised.104 Separately, ASIC has noted that it will generally not accept an undertaking that does not acknowledge that ASIC's views in relation to the alleged misconduct are reasonably held, nor any undertaking containing clauses denying liability or omitting details of the alleged misconduct.105 As a general rule, ASIC will issue a media release regarding the enforceable undertaking and make it publicly available.106 In relation to reports drafted by independent experts, it will publish a summary of the final report or a statement referring to its content (and will generally also publish a summary of, or statement referring to the content of, any interim report).107 ASIC has stated that it will only accept an enforceable undertaking if it considers that it provides a 'more effective regulatory outcome than non-negotiated, administrative or civil sanctions'.108 Importantly, ASIC will not consider an enforceable undertaking unless it has reason to believe there has been a breach of the law and it has commenced an investigation or surveillance in relation to the conduct,109 and will not accept an enforceable undertaking as an alternative to commencing criminal proceedings.110
iv Sentencing and liability
The criminal penalties for securities laws contraventions imposed by courts are increasingly severe,111 reflecting the gravity with which the courts regard such offences.
For individuals, conviction of certain serious securities market offences carries a sentence of up to 15 years' imprisonment; a fine that is the greater of (1) A$945,000 (4,500 penalty units) and (2) three times the total value of the benefits obtained and detriments avoided that are reasonably attributable to the commission of the offence; or both imprisonment and a fine.112
Corporations that commit such offences can be fined the greater of:
- A$9.45 million (45,000 penalty units);
- three times the total value of the benefits obtained and detriments avoided that are reasonably attributable to the commission of the offence; and
- 10 per cent of the corporation's annual turnover during the year preceding the commission of the offence.113
Civil penalty proceedings
In civil penalty cases, for individuals, the court may impose a pecuniary penalty of up to the greater of:
- A$1.05 million (5,000 penalty units); and
- three times the total value of the benefits obtained and detriments avoided that are reasonably attributable to the contravention.114
For corporations, the court may impose a pecuniary penalty of up to the greatest of:
- A$10.5 million (50,000 penalty units);
- three times the total value of the benefits obtained and detriments avoided that are reasonably attributable to the contravention; and
- 10 per cent of the corporation's annual turnover in the year preceding the contravention, up to a maximum of A$525 million (2.5 million penalty units).115
The maximum penalty payable under an infringement notice issued in relation to continuous disclosure is A$100,000 for entities with a market capitalisation over A$1 billion.116 For infringement notices under the expanded regime introduced in March 2019, the maximum penalty under the notice is:
- (for a criminal offence) half the maximum penalty that a court could impose for the offence; and
- (for a contravention of a civil penalty provision) A$2,520 (12 penalty units) for an individual and A$12,600 (60 penalty units) for a corporation.117
IV CROSS-BORDER ISSUES
i Jurisdictional issues
The amenability of a foreign issuer to public or private securities actions in Australia will depend largely on:
- the foreign issuer's legal presence in Australia;
- whether the foreign issuer is listed on an Australian exchange and the type of listing it has; and
- the nature and location of the foreign issuer's relevant conduct that may form the basis of potential securities actions.
Legal presence in Australia
One aspect of Australian courts' jurisdiction is the amenability of a defendant to the court's writ.118 Once a defendant has been legally served, a court has jurisdiction to entertain the action against that defendant.119 Service can be effected on those present within the relevant Commonwealth, state or territory jurisdiction. A foreign issuer's presence in the jurisdiction, and thus amenability to a court's writ, may be necessitated by either of the following:
- a foreign company carrying on business in Australia is required to register with ASIC and appoint a local agent120 who, among other things, must accept service on behalf of that foreign company;121 or
- a foreign entity listed on the ASX, whether as an ASX Listing, an ASX Foreign Exempt Listing or an ASX Debt Listing, must appoint an agent for service of process in Australia.122
Listing on an Australian exchange
Listing on an Australian exchange creates certain disclosure obligations on a foreign issuer, although these will differ depending on the nature of that listing.
The listing rules regarding continuous disclosure, the foundation of shareholder class actions and ASIC enforcement relating to market disclosure, apply to foreign entities who have a standard ASX Listing and to those who have an ASX Debt Listing in relation to their debt securities.123
Those issuers with an ASX Foreign Exempt Listing, while only required to comply with the disclosure obligations of their home exchange, are nonetheless required to provide the ASX with any information that they provide to their home exchange.124 The provision of such information will still be subject to statutory prohibitions on engaging in misleading conduct.125
Location of relevant conduct
Another aspect of Australian courts' jurisdiction relevant to foreign issuers is the power of a court to determine a matter,126 which becomes complex where conduct in that matter occurs outside Australia.
Although the provisions in the Corporations Act typically relied on in shareholder class actions do not operate in relation to extraterritorial conduct, there are other statutory prohibitions on engaging in misleading conduct that do.127 Ministerial consent is required to rely on evidence of foreign conduct in any private action claiming damages pursuant to the consumer protection provisions of the ASIC Act, and the Treasury has published guidance to assist in this process.128 However, such consent is generally no longer required by private individuals relying on evidence of foreign conduct to bring an action pursuant to the Australian Consumer Law.129
ii Insider trading
Australia's insider trading provisions have extraterritorial effect. They apply to:
- conduct within Australia in relation to financial products regardless of where the issuer of the product is formed, resides or is located, or of where the issuer carries on business; and
- conduct outside Australia in relation to financial products issued by a person who carries on business in Australia or a company that is formed in Australia.130
iii Cross-border investigations
ASIC continues to cultivate its relationships with overseas regulators to facilitate investigations and enforcement action. The challenge of globalisation was recognised by ASIC in its 2016–2017 to 2019–2020 Corporate Plan as presenting a number of 'key risks' that may compromise investor outcomes. The Corporate Plan notes that ASIC will 'support cross-border activities', including by:
- facilitating the development and application of consistent standards and requirements across borders, by contributing to the work of international regulatory bodies, principally the International Organization of Securities Commissions;
- supporting equivalence assessments with counterpart regulators;
- negotiating and implementing bilateral and multilateral agreements and understandings, including fintech-related agreements; and
- supporting initiatives that help the capabilities of regulators in our region.131
ASIC's most recent Corporate Plan for 2019–2023 notes that it will facilitate cross-border financial activities and capital flows by:
- engaging and collaborating with international regulators and consolidating key relationships;
- contributing to the work of international bodies;
- designing and implementing regulatory policies relating to the Asia Region Funds Passport and corporate collective investment vehicles;
- implementing a licensing regime for foreign financial services providers;
- negotiating and implementing bilateral and multilateral agreements and understandings on regulatory, supervisory and enforcement matters; and
- exchanging enforcement information under IOSCO's multilateral memorandum, to mitigate poor behaviour and protect investors.132
The 2019–2023 Corporate Plan also notes ASIC's intention to address potential harms arising from cross-border misconduct or unlicensed activities, fundraising and control transactions involving cross-border transactions, foreign issuers participating in the domestic market, and operational complexities of entities operating within multiple jurisdictions and licensing regimes.
V YEAR IN REVIEW
i Common fund orders not permitted under s 33ZF of the Federal Court of Australia Act 1976 (Cth)
On 4 December 2019, the High Court of Australia handed down its decision in BMW Australia Ltd v Brewster & Anor and Westpac Banking Corporation & Anor v Lenthall & Ors  HCA 45 (BMW v Brewster), delivering its views on whether section 33ZF of the Federal Court of Australia Act 1976 (Cth) confers the power to make common fund orders.
A common fund order is an order of the court requiring all group members to contribute to the litigation funder's fee, irrespective of whether group members have signed a funding agreement. In BMW v Brewster, the defendant's opposition to the plaintiff's application for a common fund order ultimately resulted in the issue of the court's power to make a common fund order being referred to the High Court. Section 33ZF of the Federal Court of Australia Act 1976 (Cth) and its equivalent Section 183 of the Civil Procedure Act 2005 (NSW) permit the Court to 'make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding'. The High Court held, by a 5:2 majority, that the courts do not have the power to make common fund orders under these provisions.
The judgment of Kiefel CJ, Bell and Keane JJ interpreted the section as addressing how an action proceeds, rather than the distinct question of whether a proceeding can proceed.133 Their Honours considered that making sure that a proceeding is funded is not 'appropriate or necessary to ensure that justice is done' and further considered that to use Section 33ZF to support a common fund order was to effectively 're-write' other legislative provisions that expressly dealt with the distribution of proceeds at the conclusion of those representative proceedings.134 Their Honours held that there was no justification for judicial involvement with common fund orders 'to ease the commercial anxieties of litigation funders'.135 Various judges acknowledged the problem of free riding in instances where only funded group members bear the costs of the proceedings and turned their minds to whether funding equalisation orders could play a role in addressing equitable cost sharing between group members. Four judges accepted the validity of funding equalisation orders, which provide for deductions from the amounts payable to unfunded group members, that correspond to the funding commission contributions paid by funded group members.136
The decision has widespread implications, particularly for litigation funders who are likely to apply greater scrutiny when assessing the viability of potential class actions going forward. The need for 'book-building' before filing a claim will also become more imperative. Discrepancies between costs borne by funded and unfunded group members will continue to be met by funding equalisation orders. Pressure is expected to mount on state and federal legislatures to introduce an express statutory power for courts to make common fund orders.
ii Increased enforcement activity and expanded penalties laws
In 2019 there was a detectable shift in regulatory focus following the conclusion of the Financial Services Royal Commission, which recommended that ASIC's approach to enforcement should first ask whether a court should determine the consequences of a contravention. The recommendation has sparked ASIC's new 'why not litigate' posture to enforcement, and an uptick in ASIC enforcement investigations. Since the Financial Services Royal Commission, there has been a 20 per cent increase in the number of ASIC enforcement investigations, a 51 per cent increase in enforcement investigations involving the big six banks, and a 216 per cent increase in wealth management investigations.137
Increasingly aggressive enforcement activity was combined with amendments to maximum civil penalties laws. In October 2018, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Cth) was introduced to Parliament. The Bill passed both Houses of Parliament on 18 February 2019, received royal assent on 12 March 2019 and has commenced operation. The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth) provides for:
- increased maximum criminal and civil penalties for certain offences and contraventions of civil penalty provisions under the Corporations Act 2001 (Cth), National Consumer Credit Protection Act 2009 (Cth), Insurance Contracts Act 1984 (Cth) and National Credit Code by bodies corporate and individuals;
- a consolidated and more uniform penalties framework in these Acts;
- an extension of the civil penalty regime to apply to provisions that were not previously civil penalties provisions, including Section 912A (which imposes a duty on financial services licensees to provide financial services efficiently, honestly and fairly) and Section 912D (which imposes a duty on financial services licensees to report breaches or likely breaches of Sections 912A and 912B) of the Corporations Act 2001 (Cth);
- an increased range of circumstances in which an infringement notice may be issued; and
- a lower threshold for establishing 'dishonesty' in relation to dishonesty offences under the Corporations Act 2001 (Cth) by removing the subjective limb of the test.
Further, the amending legalisation introduces a provision to deal with the consequences of continuing contraventions of civil penalty provisions. Section 1317QA of the Corporations Act 2001 (Cth) prescribes that where an act or thing is required to be done under a civil penalty provision within a certain period or before a specified time, a person who contravenes the provision commits a separate contravention of that provision in respect of each day during which the contravention occurs. In combination with the increase in the maximum civil penalty for which a contravener may be liable, ASIC is equipped to prosecute claims for civil penalties of a substantial magnitude, which may significantly increase the gravity of proceedings relating to 'administrative contraventions' such as breach reporting under Section 912D. ASIC's Deputy Chair, Daniel Crennan QC, indicated that changes introduced by the Treasury Laws Amendment Act 2019 will result in ASIC seeking harsher civil penalties against banks, executives and others who breach corporate and financial services law.138
The increase in civil penalties powers has coincided with decisions in 2019 imposing record civil penalties. On 20 December 2019, the Federal Court ordered Volkswagen AG to pay A$125 million in penalties, after declaring by consent that it breached the Australian Consumer Law by making false representations in relation to compliance with Australian diesel emissions standards. The figure represents a marked increase on the A$75 million settlement figure reached by Volkswagen and the Australian Competition and Consumer Commission, criticised by Foster J as 'manifestly inadequate'.139 His Honour noted that the penalty agreed by the parties was not supported by any reasoning or justification other than that it was arrived at as a compromise as part of an overall settlement.140 Although imposed under the old penalty regime, the decision constitutes the highest total penalty order ever made by the Court, and emphasised that parties' compromise positions will not guide the court's attitude to what penalty should be payable.
Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 5)  FCA 1544 (Empower Institute Case) also provided an indication that courts may be increasingly willing to impose significant civil penalties in regulatory proceedings. On 20 September 2019, Gleeson J ordered Cornerstone Investments Aust Pty Ltd, trading as Empower Institute, to pay A$26.5 million for contraventions of Sections 21, 29(1)(g), 29(1)(i), 74, 75, 76, 78 and 79 of the Australian Consumer Law. In the Empower Institute Case, Gleeson J found that Empower's untrained recruiters targeted vulnerable consumers to induce them to sign up to its courses with promises of cash and free laptops, enrolling 6,000 new students in its courses between March 2014 and October 2015, and receiving over A$64 million in VET FEE-Help payments from the federal government.
These cases illustrate the Federal Court's increasing preparedness to issue significant civil penalties – a trend that will be closely observed by practitioners in the area of securities litigation. The judicial approach to fixing the amount of a penalty relies on instinctive synthesis, balancing all the factors relevant to the contravention and contravenor, and making a value judgment as to the appropriate penalty given the protective and deterrent purposes of imposing pecuniary penalties.141 The 2019 expansion of the civil penalty regime, combined with the wide judicial discretion offered by the instinctive synthesis approach, offers greater scope for an expansion of the trend as cases come to be considered under the new penalties legislation.
VI OUTLOOK AND CONCLUSIONS
Securities litigation, both public and private, continues to be a significant risk facing both issuers and financial market participants. The year ahead holds particular uncertainty given the ongoing impact of COVID-19 on markets, industry and regulators.
i ASIC's regulatory response to covid-19
On 23 March 2020, ASIC announced that it will recalibrate its regulatory priorities and 'focus its regulatory efforts on challenges created by the covid-19 pandemic'.142 Specifically, it will:
- until at least September 2020, afford priority to matters where there is a risk of significant consumer harm, serious breaches of the law, risks to integrity and time-critical matters;
- where warranted, provide relief or waivers from regulatory requirements, including requirements on listed companies associated with secondary capital raisings and audits;
- suspend a number of near-term activities that are not time-critical, including consultation, regulatory reports and reviews; and
- suspend on-site supervisory work.
The stated purpose of these measures is to enable industry participants to focus on their immediate priorities and the needs of their customers. In practical terms, it could mean that ASIC will temper its 'why not litigate' approach to enforcement, which was adopted following the Financial Services Royal Commission.
ii Covid-19 and continuous disclosure obligations
Covid-19 will present significant challenges to listed entities in relation to complying with their continuous disclosure obligations. Rapidly changing circumstances in relation to reduced consumer demand, supply chain disruptions, increased credit risk and counterparty risk, market volatility, and the impact of government interventions will make it more difficult than usual for companies to quickly identify and release information that is likely to have a material effect on the price or value of their securities. This could result in increased regulatory and class-action risk for some companies.
iii Introduction of contingency fee arrangements in Victoria
The Victoria State Government has indicated that it intends to make amendments to the Supreme Court Act 1986 (Vic) which would make it legal for plaintiff lawyers to charge clients a percentage of a settlement or court order following a successful claim. This move would bring the rules related to plaintiff law firms in line with those regulating litigation funders, who are already able to charge contingency fees.
The amending bill was introduced in response to recommendations made by the Victorian Law Reform Commission (VLRC) in March 2018. The VLRC considered that the availability of contingency fees could improve access to justice, introduce competition for litigation funders and be appropriately controlled under the Court's supervision.143
The bill empowers the Supreme Court of Victoria to make contingency fee arrangements (referred to as group costs orders) on the application of the representative plaintiff, where the Court is satisfied that it is appropriate or necessary to ensure justice in the proceeding. The bill envisions the sharing of the contingency fee among the plaintiff and all group members. A group costs order would also make the plaintiff law firm liable to pay costs awarded to the defendant and give security for costs ordered.
The reform may result in forum shopping and a rise in the number of class actions brought in Victoria, as contingency fees continue to be prohibited in the Federal Court and in other state courts. Greater competition over high-value claims, including securities class actions, is another likely consequence, and may in turn drive down commissions to the benefit of class members. Whether some plaintiff law firms will respond with greater efforts to reduce the costs of running the trial remains to be seen. On a broader level, other state parliaments will be closely observing the Victorian experience to inform their own approaches to contingency fee arrangements.
As of 19 March 2020, the bill continues to be debated in the Victorian Legislative Council.
1 Luke Hastings and Andrew Eastwood are partners at Herbert Smith Freehills. The authors wish to thank Danielle Briers, Alison Cranney, Jedda Elliott, Jordan Phoustanis, Camilla Pondel, Anitha Reddy, Emily Shepherd, Mungo Skyring and Sarah Webster for their assistance in producing this chapter.
2 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 6.
3 ASIC, 'Regulatory Guide 216: Markets Disciplinary Panel' (August 2019), Paragraphs 1, 9, 10 and 21.
4 Corporations Act 2001 (Cth) Section 1317DAC. See also ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), Paragraphs 1–4.
5 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 5.
6 Corporations Act 2001 (Cth) Part 7.10, Divisions 2, 3.
7 Director of Public Prosecutions (Cth) v. JM (2013) 250 CLR 135, 168 at  (per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ).
8 See, for example: Corporations Act 2001 (Cth) Sections 670A, 670B, 674, 728, 729, 1041E, 1041G, 1041H, 1041I; Australian Securities and Investments Commission Act 2001 (Cth) Section 12DA; Competition and Consumer Act 2010 (Cth) Schedule 2 Australian Consumer Law Section 18. See, generally, Baxt, Black and Hanrahan, Securities and Financial Services Law (8th edn, LexisNexis Butterworths, 2012), Chapter 5.
9 Google Inc v. Australian Competition and Consumer Commission (2013) 249 CLR 435 at  and  (per French CJ, Crennan and Kiefel JJ).
10 ASX, Listing Rules (14 April 2014) Rule 3.1 (given statutory force by the Corporations Act 2001 (Cth) Section 674). Exceptions to this obligation arise under Rule 3.1A if the information is confidential, a reasonable person would not expect it to be disclosed and one or more of the following situations applies:
a it would be a breach of a law to disclose the information;
b the information concerns an incomplete proposal or negotiation;
c the information comprises matters of supposition or is insufficiently definite to warrant disclosure;
d the information is generated for the internal management purposes of the entity; or
e the information is a trade secret.
11 Corporations Act 2001 (Cth) Sections 79, 181 and 674.
12 Under Section 11.2 of the Schedule to the Criminal Code Act 1995 (Cth), a person who 'aids, abets, counsels or procures the commission of the offence by another person' is taken to have committed the offence.
13 Corporations Act 2001 (Cth) Section 181.
14 See, for example: ASIC, 'Decision in Centro civil penalty case' (11-125MR, 24 June 2011); ASIC, 'ASIC enforcement outcomes: January to June 2015' (Report No. 444, August 2015), p. 19; ASIC, 'ASIC enforcement outcomes: July to December 2015' (Report No. 476, March 2016); 'ASIC enforcement outcomes: January to June 2017' (Report No. 536, August 2017); Medcraft, 'ASIC explained: who is the corporate watchdog, what does it do and why should Australians care?' (speech delivered at the National Press Club of Australia, Canberra, 3 December 2014).
15 See, for example: ASIC, 'Macquarie Investment Management penalised over Corporations Act contraventions' (16-271MR, 24 August 2016); ASIC, 'Former Kleenmaid director sentenced to nine years imprisonment for fraud and insolvent trading' (16-257MR, 15 August 2016); ASIC, 'MFS executives found to have dishonestly breached duties' (16-158MR, 23 May 2016); ASIC, 'ASIC bans former director of Provident Capital Limited' (15-199MR, 28 July 2015); ASIC, 'Former Chief Financial Officer of ABC Learning Centres sentenced' (15-073MR, 31 March 2015); and the following ASIC media releases on the Centro, James Hardie and Fortescue Metals Group cases: 'ASIC commences proceedings against current and former officers of Centro' (09-202AD, 21 October 2009); 'Decision in Centro civil penalty case' (11-125MR , 24 June 2011); 'Centro civil penalty proceedings' (11-188MR, 31 August 2011); 'Former Centro auditor suspended' (12-288MR, 19 November 2012); 'James Hardie civil penalty proceedings' (09-152, 20 August 2009); 'Decisions in James Hardie civil penalty case' (10-273MR, 17 December 2010); 'Decision in James Hardie penalty proceedings' (12-275MR, 13 November 2012); 'ASIC commences proceedings against Fortescue Metals Group and Andrew Forrest' (06-062, 2 March 2006); 'ASIC takes action against Fortescue Metals and CEO Andrew Forrest' (MR09-55, 3 April 2009); 'ASIC's proceedings against Fortescue Metals Group Ltd and Andrew Forrest dismissed' (09-268AD, 23 December 2009); 'Decision in High Court appeal by Fortescue Metals Group and Andrew Forrest' (12-244MR, 2 October 2012).
16 See, for example: Andrew Main, 'Gwalia administrators get $125m to settle damages case', The Australian, 5 September 2009; Patrick Durkin, 'KPMG to pay $67m over Westpoint', The Australian Financial Review, 1 February 2011; Nick Lenaghan, 'Centro, PwC take record $200m legal hit', The Australian Financial Review, 9 May 2012.
17 For the purposes of this chapter, representative proceedings will be referred to by the more commonly understood title of 'class actions'.
18 Federal Court of Australia Act 1976 (Cth) Part IVA, which was introduced in 1992.
19 Supreme Court Act 1986 (Vic) Part 4A, which was introduced in 2000.
20 Civil Procedure Act 2005 (NSW) Part 10, which was introduced in 2010.
21 Civil Proceedings Act 2011 (QLD) Part 13A, which was introduced in 2016.
22 See generally, Grave, Adams and Betts, Class Actions in Australia (2nd edn, Thomson Reuters, 2012).
23 Law Reform Commission of Western Australia, Representative Proceedings: Project 103 – Final Report (June 2015).
24 Corporations Act 2001 (Cth) Section 674(2).
25 Corporations Act 2001 (Cth) Section 1041H; Australian Securities and Investments Commission Act (Cth) Section 12DA.
26 Corporations Act 2001 (Cth) Sections 1041I and 1317HA.
27 Campbells Cash and Carry Pty Ltd v. Fostif Pty Ltd (2006) 229 CLR 386.
28 Multiplex Funds Management Ltd v. P Dawson Nominees Pty Ltd (2007) 164 FCR 275.
29 Money Max Int Pty Ltd (trustee) v. QBE Insurance Group Limited (2016) 245 FCR 191.
30 BMW Australia Ltd v Brewster & Anor and Westpac Banking Corporation & Anor v Lenthall & Ors  HCA 45
31 Corporations Act 2001 (Cth) Sections 236 and 237.
32 See Ramsay and Saunders, 'Litigation by shareholders and directors: an empirical study of the statutory derivative action' (Research Report, Centre for Corporate Law and Securities Regulation, The University of Melbourne, 2006), p. 29.
33 Federal Court of Australia Act 1976 (Cth) Section 33C. While the Federal Court is the most popular forum for class actions in Australia, there are also class action regimes in the Supreme Court of Victoria, the Supreme Court of New South Wales and the Supreme Court of Queensland, which are almost identical to the federal regime: see Supreme Court Act 1986 (Vic) Part 4A, Civil Procedure Act 2005 (NSW) Part 10 and Civil Proceedings Act 2011 (QLD) Part 13A.
34 Cash Converters International Limited v. Gray (2014) 223 FCR 139 at 144  (per Jacobson, Middleton and Gordon JJ).
35 Unless the group member is a governmental or quasi-governmental body or officer, in which case written consent is required pursuant to Section 33E(2).
36 See generally, Federal Court of Australia Act 1976 (Cth) Part IVA and, in particular, Sections 33E, 33H, 33J, 33X and 33ZB.
37 See Federal Court of Australia Act 1976 (Cth), in particular Section 33N(1). For the equivalent state provisions, see Supreme Court Act 1986 (Vic) Section 33N(1), Civil Procedure Act 2005 (NSW) Section 166(1) and Civil Proceedings Act 2011 (QLD) Section 103(K).
38 See Federal Court of Australia Act 1976 (Cth) Section 33N(1).
39 See generally, ibid., Part IVA and, in particular, Sections 33Q, 33R, 33V and 33X.
40 See Federal Court of Australia Practice Note GPN-CA.
41 Earglow Pty Ltd v. Newcrest Mining Ltd and Others (2015) 230 FCR 469 at 479  (per Beach J).
42 To date such applications for discovery have generally been unsuccessful: Pathway Investments Pty Ltd & Anor v. National Australia Bank Limited  VSC 72.
43 Corporations Act 2001 (Cth) Section 237.
44 Federal Court of Australia Act 1976 (Cth) Sections 33V and 33X.
45 Australian Securities and Investments Commission v. Richards  FCAFC 89, 89 at – (per Jacobson, Middleton and Gordon JJ); Hodges v. Waters (No. 7) (2015) 232 FCR 97 at  (per Perram J); Kelly v. Willmott Forests Ltd (in liq) (No. 4)  FCA 323.
46 Peterson v. Merck Sharp & Dohme (Australia) Pty Ltd (No. 6)  FCA 447 at – (per Jessup J).
47 Corporations Act 2001 (Cth) Section 240.
48 See Ford, Austin and Ramsay, Ford's Principles of Corporations Law (16th edn, LexisNexis Butterworths), Part III 'The Law of Corporate Governance', Chapter 10 'Members' Remedies' at [10.240].
49 In the context of continuous disclosure provisions, Corporations Act 2001 (Cth) Section 1317HA states relevantly: 'A Court may order a person . . . to compensate another person . . . for damage suffered . . . if: . . . the damage resulted from the contravention' (emphasis added).
50 In the context of misleading or deceptive conduct provisions, Corporations Act 2001 (Cth) Section 1041I provides: 'A person who suffers loss or damage by conduct of another person that was engaged in contravention of Section 1041E, 1041F, 1041G or 1041H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention'.
51 See Grave, Watterson and Mould, 'Causation, Loss and Damage: Challenges for the New Shareholder Class Action' (2009), 27 Company and Securities Law Journal 483.
52 HIH Insurance Limited (in liquidation) & Ors (2016) 335 ALR 320; Caason Investments Pty Ltd v. Cao (2015) 236 FCR 322; see also Earglow Pty Ltd v. Newcrest Mining Ltd  FCA 1433 and Newstart 123 Pty Ltd v. Billabong International Ltd  FCA 1194.
53 See Grave, Adams and Betts, Class Actions in Australia (2nd edn, Thomson Reuters, 2012), pp. 920–928.
54 Corporations Act 2001 (Cth) Sections 1317H(1) and 1317J(2).
55 ibid., Section 1317H(2).
56 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013); ASIC, 'Information Sheet 180: ASIC's approach to involvement in private court proceedings' (June 2013); Australian Securities and Investments Commission Act 2001 (Cth) Section 18.
57 ASIC, 'ASIC Enforcement Update: January to June 2019' (Report 625, August 2019) p. 3.
60 Legal Services Directions 2017 (Cth) Schedule 1, Parts 1 and 4; Senate Economics References Committee, Parliament of Australia, Performance of the Australian Securities and Investments Commission (June 2014), p. 261.
61 ASIC, 'Information Sheet 145: ASIC's compulsory information gathering powers' (March 2020).
62 See ASIC, 'Information Sheet 242: ASIC's document production guidelines' (March 2020).
63 Australian Securities and Investments Commission v. ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181; Australian Securities and Investments Commission Act 2001 (Cth) Sections 19 and 76.
64 ASIC, 'Information Sheet 145: ASIC's compulsory information gathering powers' (March 2020).
66 Telecommunications (Interception and Access) Act 1979 (Cth), Sections 67(3) and 68(p), introduced on 18 February 2020 by the Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Act 2020 (Cth).
67 Australian Securities and Investments Commission Act 2001 (Cth) Section 68.
68 Corporations Act 2001 (Cth) Section 1316A.
69 See ASIC, 'Information Sheet 165: Claims of legal professional privilege' (December 2012); and Eastwood, 'Providing your legal advice to the regulator' (2013), 41 Australian Business Law Review 66; ASIC, 'Information Sheet 242: ASIC's document production guidelines' (March 2020) paragraphs 56 and 85 to 89.
70 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 5; ASIC Commissioner Sean Hughes, 'ASIC's approach to enforcement after the Royal Commission' (speech delivered at the 36th Annual Conference of the Banking and Financial Services Law Association, Gold Coast, Queensland, August 2019).
71 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 5.
73 See Commonwealth Director of Public Prosecutions, Statement on disclosure in prosecutions conducted by the Commonwealth (22 March 2017), pp. 3–5.
74 Corporations Act 2001 (Cth) Section 1317G(1)(a).
75 Corporations Act 2001 (Cth) Section 1317G(1)(c).
76 It should be noted that ASIC is bound by a 'model litigant obligation' when conducting civil proceedings – see Legal Services Directions 2017 (Cth) Schedule 1, Parts 1 and 4; Appendix B.
77 Corporations Act 2001 (Cth) Section 1317M.
78 ibid., Sections 1317P and 1317Q.
79 Australian Securities and Investments Commission Act 2001 (Cth) Section 25; see generally Eastwood, 'Potential Uses of Transcripts of ASIC Examinations' (2009) 27 Company and Securities Law Journal 555; ASIC, 'Information Sheet 181: Providing information and documents to private litigants' (June 2013).
80 Australian Securities and Investments Commission Act 2001 (Cth) Section 12GG.
81 Corporations Act 2001 (Cth) Section 1317DAC; ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: Infringement notices' (October 2017), Paragraphs 1, 3 and 21.
82 ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: Infringement notices' (October 2017), Paragraph 23(e).
83 Corporations Act 2001 (Cth) Sections 1317DAM and 1317DAN, introduced on 13 March 2019 by the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth).
84 ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: Infringement notices' (October 2017), Paragraph 6.
85 ibid., Table 1 and Paragraphs 13–20; Corporations Act 2001 (Cth) Section 1317DAD(1)(b).
86 Corporations Act 2001 (Cth), Part 9.4AB including Section 1317DAT(1).
87 Corporations Act 2001 (Cth) Sections 1317DAF(5) and 1317DAU.
88 ibid., Sections 1317DAF(4) and 1317DAU(1)(e).
89 ibid., Section 1317DAJ; ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: Infringement notices' (October 2017), Table 1 and Paragraphs 39–40.
90 ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), Paragraph 41.
91 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), Page 7; Australian Securities and Investments Commission Act 2001 (Cth), Sections 12GX(1) and 12GXA; National Consumer Credit Protection Act 2009 (Cth), Sections 288J and 288K.
92 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), Page 7; ASIC, 'Regulatory Guide 216: Markets Disciplinary Panel (August 2019), Paragraph 21; Corporations Act 2001 (Cth), Section 798K(1); Corporations Regulations 2001 (Cth), Regulation 7.2A.04.
93 NW Frozen Foods Pty Ltd v. Australian Competition and Consumer Commission (1996) 71 FCR 285, 291 (per Burchett and Kiefel JJ) and 298–299 (per Carr J); Australian Securities and Investments Commission v Port Philip Publishing Pty Ltd  FCA 1483, at  (per O'Callaghan J).
94 Director, Fair Work Building Industry Inspectorate v. Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331.
95 Commonwealth v. Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at  (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). This is in contrast to criminal proceedings, in which prosecutors cannot make a submission as to the appropriate sentence or sentencing range: Barbaro v. The Queen (2014) 253 CLR 58.
96 Commonwealth v. Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at  (per French CJ, Kiefel, Bell, Nettle and Gordon JJ).
97 Australian Securities and Investments Commission v. Westpac Banking Corporation  FCA 1733 at  (per Perram J).
98 Commonwealth Director of Public Prosecutions, Prosecution Policy of the Commonwealth: Guidelines for the Making of Decisions in the Prosecution Process, 9 September 2014, Paragraph 6.17 (CDPP Prosecution Policy).
99 ibid., Paragraph 6.14.
100 Barbaro v. The Queen (2014) 253 CLR 58.
101 ASIC, 'Regulatory Guide 100: Enforceable undertakings' (February 2015), Paragraph 4.
102 See for example ASIC Commissioner Sean Hughes, 'ASIC's approach to enforcement after the Royal Commission' (speech delivered at the 36th Annual Conference of the Banking and Financial Services Law Association, Gold Coast, Queensland, August 2019). By way of illustration, in ASIC's report on enforcement outcomes for January to June 2018 (REP 585), ASIC stated that it had obtained 12 enforceable undertakings in that period (Page 5). In the equivalent report for January to June 2019 (REP 625) ASIC stated that it had obtained 1 enforceable undertaking (Page 5).
103 ASIC, 'Regulatory Guide 100: Enforceable undertakings' (February 2015), Table 4.
104 ibid., Paragraphs 43–44.
105 ibid., Paragraphs 39–40.
106 ibid., Paragraph 42.
107 ibid., Paragraphs 78–85.
108 ibid., Paragraph 18.
109 ibid., Paragraph 17.
110 ibid., Paragraph 21.
111 See, for example: Xiao v. Regina  NSWCCA 4 (where the Court of Criminal Appeal quashed the sentence imposed by the trial judge in Regina v. Xiao  NSWSC 240 but did not accept that the original sentence was manifestly excessive and nevertheless imposed a lengthy effective overall sentence of seven years' imprisonment with a non-parole period of four years and six months); Regina v. Glynatsis (2013) 230 A Crim R 99; The Queen v. Jacobson  VSC 592; Commonwealth Director of Public Prosecutions v. Hill and Kamay  VSC 86.
112 Corporations Act 2001 (Cth) Section 1311B, 1311D and Schedule 3 – Penalties. The value of one penalty unit has been A$210 since 1 July 2017. On 1 July 2020 it will be indexed in accordance with Section 4AA of the Crimes Act 1914 (Cth).
113 ibid., Sections 1311C and 1311D.
114 ibid., Section 1317G(3) and 1317GAD.
115 ibid., Sections 1317G(4) and 1317GAD.
116 ibid., Section 1317DAE(2) and (6)(a).
117 ibid., Section 1317DAP(1)(f) and (2).
118 Lipohar v. The Queen (1999) 200 CLR 485, 516–517 (per Gaudron, Gummow and Hayne JJ).
119 Copping v. Tobin Brothers Canberra Marine Centre Pty Ltd  1 NSWLR 183; Laurie v. Carroll (1958) 98 CLR 310. See also, for example: the Uniform Civil Procedure Rules 2005 (NSW) Rule 6.2; Supreme Court (General Civil Procedure) Rules 2015 (Vic) Rule 6.02; Federal Court Rules 1979 (Cth) Rule 7.1.
120 Corporations Act 2001 (Cth) Section 601CF.
121 ibid., Section 601CX.
122 ASX, Listing Rules (1 December 2019), Rule 1.1 conditions 4 and 5(b) (ASX listings), Rule 1.11 condition 7 (ASX foreign exempt listings), Rule 1.8 conditions 7 and 8(d) (ASX debt listings); ASX, ASX Listing Rules Guidance Note 4 – Foreign entities listing on ASX (1 December 2019), p. 24.
123 ASX, Listing Rules (1 December 2019), Rule 1.10.1; ASX, Listing Rules (1 December 2019), Rules 3.1–3.1B; ASX, ASX Listing Rules Guidance Note 8 – Continuous Disclosure: Listing Rules 3.1–3.1B (23 August 2019).
124 ASX, ASX Listing Rules (1 December 2019), Rules 1.15.2, 1.15.3; ASX, ASX Listing Rules Guidance Note 8 – Continuous Disclosure: Listing Rules 3.1–3.1B (23 August 2019).
125 Such as the Corporations Act 2001 (Cth) Section 1041H and the Australian Securities and Investments Commission Act 2001 (Cth) Section 12DA.
126 Lipohar v. The Queen (1999) 200 CLR 485.
127 Under the Competition and Consumer Act 2010 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth).
128 Australian Securities and Investments Commission Act 2001 (Cth) Section 12AC; Australian Treasury, 'Guidance on obtaining ministerial consent to rely on extraterritorial conduct in private proceedings' (3 April 2012), www.treasury.gov.au/the-department/accountability-reporting/information-publication-scheme/guidance-on-obtaining-ministerial-consent-to-rely-on-extraterritorial-conduct-in-private-proceedings/.
129 Competition and Consumer Act 2010 (Cth) Section 5.
130 Corporations Act 2001 (Cth) Section 1042B.
131 ASIC, 'ASIC's Corporate Plan 2016–2017 to 2019–20', p. 30.
132 ASIC, 'ASIC Corporate Plan 2019-23', p. 31.
133 At  per Kiefel CJ, Bell and Keane JJ.
134 At - per Kiefel CJ, Bell and Keane JJ.
135 At  per Kiefel CJ, Bell and Keane JJ.
136 At - per Kiefel CJ, Bell and Keane JJ; at  per Gordon J.
137 Australian Securities and Investments Commission, REP 625 ASIC Enforcement Update January to June 2019 (2019), 3.
139 Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft  FCA 2166 at  (Foster J).
141 See, eg, Australian Securities and Investments Commission v Adler  NSWSC 483; (2002) ACSR 80 at ; Australian Securities and Investments Commission v Westpac Banking Corporation  FCA 2147 at - (Wigney J); Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft  FCA 2166 at .
142 ASIC, 'ASIC recalibrates its regulatory priorities to focus on COVID-19 challenges' (23 March 2020).
143 Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Report (March 2018), available at www.lawreform.vic.gov.au/sites/default/files/VLRC_Litigation_Funding_and_Group_Proceedings_Report_forweb.pdf, page 63.