SUBJECTS: Strengthening of ASIC'S investigative powers, increased penalties for market misconduct offences.
PETER RYAN:
The Minister for Corporate Law, Chris Bowen, that will have potential perpetrators thinking twice before they manipulate the market.
CHRIS BOWEN:
Ten years is a very significant penalty and will certainly concentrate the mind of those considering undertaking this crime. Importantly, one of the penalties we're introducing is three times the profit made or loss avoided, so clearly if you are contemplating making money out of this sort of criminal activity, you've got to bear in mind that you might lose three times that amount as well as go to prison if you're detected.
RYAN:
Do these tough new laws provide recognition that the current situation is just not workable and has not been enough of a deterrent?
BOWEN:
I think frankly it does. I do think there have been issues in insider trading. If you look at the number of referrals from the Australian Securities Exchange to ASIC, while a small proportion of the total number of trades each day, there's nevertheless a significant number of referrals. Also, ASIC have pointed out to me, and a number of market commentators have pointed out, that you can regularly see increases in the share price of certain companies before market sensitive announcements are publicly made. That indicates that there is an issue to be addressed. These reforms we've announced today are designed to address that issue.
RYAN:
Do you believe this will be sending a chill down corporate boardrooms round the country?
BOWEN:
Well, only for those people who are doing something wrong. The vast majority of directors, executives, investors and shareholders do nothing wrong and not only have nothing to fear, but I'm sure will welcome these reforms because people who engage in insider trading profit at the expense of those who do not have that information. So I think the vast majority of people engaged in corporate life in Australia would look at these reforms and say, 'Well, this is fair because we're not doing anything wrong and those who are doing the wrong thing deserve to be punished very severely'.