Australian Securities and Investments Commission v Commonwealth Securities Limited

The Australian Securities and Investments Commission (ASIC) brought proceedings against Commonwealth Securities Limited (CommSec) and Australian Investment Exchange Limited (AUSIEX) in the Federal Court, alleging civil contraventions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth). The primary issues before the court involved whether it was appropriate to make declarations of contravention, impose civil penalties, and order the defendants to implement compliance programs. Both CommSec and AUSIEX had previously faced proceedings before the Market Disciplinary Panel and had cooperated with the regulator, remediated harm caused to customers, expressed contrition, and taken steps to improve future compliance.

The court considered the extensive and systematic nature of the contraventions, which affected multiple aspects of the businesses of both CommSec and AUSIEX. The court recognised the mitigating factors, such as the absence of evidence indicating deliberate conduct by senior management, the cooperation with ASIC, the remediation of client detriment, and the acknowledgment of the seriousness of the contraventions. The parties agreed on the proposed relief, including the imposition of civil penalties and the implementation of compliance programs.

In light of the agreed penalty and the mitigating factors, the court found it appropriate to order the pecuniary penalties in the agreed amount, make the declarations sought, and order the compliance programs. The court ordered CommSec to pay a penalty of $20 million and AUSIEX to pay a penalty of $7.12 million. Both CommSec and AUSIEX were ordered to implement the agreed compliance plans, which involved independent expert reviews and remedial action plans to rectify identified deficiencies and ensure ongoing compliance with relevant provisions. The defendants were also required to pay the plaintiff's costs of the proceeding.