Australian Securities and Investments Commission v Mercer Superannuation (Australia) Limited

In the Federal Court of Australia, the Australian Securities and Investments Commission (ASIC) brought proceedings against Mercer Superannuation (Australia) Limited (Mercer), a trustee of the Mercer Super Trust, for making false and misleading statements concerning its exclusion of investments in certain companies. The dispute centred on Mercer’s representations about its exclusion of investments in companies involved in or deriving profit from carbon-intensive fossil fuels, alcohol, and gambling, despite the funds actually investing in such companies. The case was resolved through an agreed statement of facts and admissions, joint submissions on liability and relief, and a proposal for specific penalties and publicity orders.

The primary legal issues involved whether the relief sought by the parties was appropriate in all circumstances. This encompassed determining the appropriate pecuniary penalties and the suitability of an adverse publicity order. The court had to consider the seriousness of the contraventions, the level of cooperation by Mercer, and the need for deterrence. The court also had to determine whether the proposed penalties and orders were sufficient to achieve the objectives of deterrence and public accountability.

The court found the contraventions admitted by Mercer to be serious, stemming from inadequate systems and oversight that allowed for false or misleading claims regarding its sustainable investment policies. The court recognised the cooperation shown by Mercer in admitting wrongdoing and in resolving the proceedings. It was noted that any misrepresentation in ESG policies could undermine consumer confidence in financial products. However, the court also acknowledged the mitigating factors, such as Mercer’s remedial actions and cooperation with ASIC. The court concluded that the proposed penalties of $11.3 million, along with an adverse publicity order, were appropriate in the circumstances. The court emphasised the need to ensure that penalties were sufficient to deter not only Mercer but also other potential offenders.

In summary, the court granted the declarations and penalties sought by the parties, imposing a pecuniary penalty of $11.3 million on Mercer and ordering an adverse publicity notice to be published on Mercer’s website for six months. Additionally, Mercer was ordered to pay ASIC’s costs and expenses in the agreed sum of $200,000.