Category: Financial Services

Posted on

CDPP Prosecution Policy

The Prosecution Policy of the Commonwealth underpins all of the decisions made by the CDPP throughout the prosecution process and promotes consistency in decision making. It is a public document and applies to all Commonwealth prosecutions.

The Prosecution Policy outlines the relevant factors and considerations which are taken into account when our prosecutors are exercising their discretion. The Policy also serves to inform the public and practitioners of the principles which guide the decisions made by the CDPP.

The Prosecution Policy provides a two-stage test that must be satisfied before a prosecution is commenced:

  • there must be sufficient evidence to prosecute the case; and
  • it must be evident from the facts of the case, and all the surrounding circumstances, that the prosecution would be in the public interest.

In determining whether there is sufficient evidence to prosecute a case the CDPP must be satisfied that there is prima facie evidence of the elements of the offence and a reasonable prospect of obtaining a conviction. The existence of a prima facie case is not sufficient.

In making this decision, our prosecutors must evaluate how strong the case is likely to be when presented in court. They must take into account matters such as the availability, competence and credibility of witnesses, their likely effect on the arbiter of fact, and the admissibility of any alleged confession or other evidence. The prosecutor should also have regard to any lines of defence open to the alleged offender and any other factors that could affect the likelihood or otherwise of a conviction.

The possibility that any evidence might be excluded by a court should be taken into account and, if that evidence is crucial to the case, this may substantially affect the decision whether or not to institute or proceed with a prosecution. Prosecutors need to look beneath the surface of the evidence in a matter, particularly in borderline cases.

Having been satisfied that there is sufficient evidence to justify the initiation or continuation of a prosecution, the prosecutor must then consider whether the public interest requires a prosecution to be pursued. In determining whether this is the case, prosecutors will consider all of the provable facts and all of the surrounding circumstances. The public interest factors to be considered will vary from case to case, but may include:

  • whether the offence is serious or trivial;
  • any mitigating or aggravating circumstances;
  • the youth, age, intelligence, physical health, mental health or special vulnerability of the alleged offender, witness or victim;
  • the alleged offender’s antecedents and background;
  • the passage of time since the alleged offence;
  • the availability and efficacy of any alternatives to prosecution;
  • the prevalence of the alleged offence and the need for general and personal deterrence;
  • the attitude of the victim;
  • the need to give effect to regulatory or punitive imperatives; and
  • the likely outcome in the event of a finding of guilt.
  • These are not the only factors, and other relevant factors are contained in the Prosecution Policy.

Generally, the more serious the alleged offence is, the more likely it will be that the public interest will require that a prosecution be pursued.

The decision to prosecute must be made impartially and must not be influenced by any inappropriate reference to race, religion, sex, national origin or political association. The decision to prosecute must not be influenced by any political advantage or disadvantage to the Government.

Posted on

Marketing practices in initial public offerings (IPO) of securities Report 494

From Report 494 Marketing practices in initial public offerings of securities September 2016.

The report outlines the key findings from reviews we conducted by ASIC to examine how initial public offerings (IPOs) are marketed to retail investors. ASIC particularly considered the extent to which social media has become important for marketing. The report identifies some risks and recommendations that may be useful for firms and issuers to consider when developing an IPO marketing strategy.

Of particular importance was the area of concern identified in the report. They are summarised below.

Oversight weakness: Telephone communications

Firms should apply tighter controls over the marketing and selling of IPOs by telephone, such as:

  1. providing employees with standardised telephone scripts;
  2. recording and routinely reviewing telephone calls with clients;
  3. applying stricter requirements on documenting telephone calls with clients; and
  4. compliance staff routinely sitting at the sales desk when telephone calls are made
    to clients.

Oversight weakness: Social media posts

Firms should apply controls on social media posts similar to those in place for other
marketing, such as:

  1. educating employees on using social media for marketing IPOs in compliance
    with the Corporations Act; and
  2. ensuring that social media posts are reviewed before being posted.

Misleading communication: Marketing an IPO other than on its merits

Firms should ensure that marketing:

  1. is based on the merits of the IPO itself; and
  2. is not based primarily on asking investors to assist with meeting spread
    requirements, or on comparisons with other successful IPOs conducted by
    the firm.

Misleading communication: Prominence of forecasts

Firms and issuers should:

  1. take care when using forecasts to market IPOs, and not give undue weight to
    forecasts in the marketing messages; and
  2. if forecasts are used, ensure the assumptions and risks of the forecasts are also
    included in the marketing material.

Misleading communication: Marketing of emerging market issuers

Firms and issuers targeting investors from a non-English speaking background
should:

  1. ensure that communications are clear and accurate (including any statements
    about the regulatory framework in Australia and about ASIC’s role); and
  2. if marketing material is being produced in a language other than English, ensure
    these materials are fully understood by the firm or issuer, including getting
    translations before publication (if necessary).

Failure to monitor: Failing to update multimedia marketing including videos

Firms and issuers should check that:

  1. the content of videos used to market IPOs is accurate and consistent with
    disclosure in the prospectus; and
  2. the content of any videos remains correct after any changes or updates are made
    to a prospectus.

Inadequate controls on access to information: Access to institutional roadshows

Firms should apply tighter controls and educate their employees to limit access to
institutional roadshows to AFS licensees and their representatives.

Inadequate controls on access to information: Potential access to pathfinder prospectus

Firms should:

  1. apply tighter controls and educate their employees to limit access to restricted
    material (including pathfinder prospectuses) to sophisticated or professional
    investors;
  2. educate their employees about the need to limit circulation of restricted material
    (including pathfinder prospectuses) before the prospectus is lodged with ASIC;
    and
  3. ensure that restricted material (including pathfinder prospectuses) or passwords
    to access restricted material are not distributed by email.

Inadequate controls on access to information: Disseminating information
before a prospectus is lodged

Firms and issuers should not provide materials about an upcoming offer to the
media. If marketing is given to persons before a prospectus is lodged with ASIC, on the
basis of those persons being a sophisticated or professional investor, firms and
issuers should ensure that the recipient actually falls within this category.

Before providing the information, firms and issuers should undertake additional
verification (e.g. obtain an accountant’s certificate) to ensure that the person is a
sophisticated or professional investor. Self-certification by a person is not sufficient.