dealing with the regulators – the wrong way, the …...18/03/2015 1 dealing with the regulators...

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Dealing with the regulators – The wrong way, the hard way, or is there a right way?

Gowri Kangeson & Simon Uthmeyer

DLA Piper

18 March 2015

Investigations by Regulators:

Overview

Informal v Formal inquiries

3rd party involved in transaction or offender

Explanation of regulators' powers of compulsion

What to do if subject to compulsive powers

2In-House Counsel Day 2015

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Context of Regulators

Scarce Resources

Regular re-alignment of priorities to investigate particular conduct – influenced by community, market and government

Current ASIC focus – financial planners, insider trading, market manipulation, continuous disclosure

Current ACCC focus – includes: cartels, health sector and truth in advertising

Prosecution of a particular matter chosen by ASIC to influence market conduct


How does a complaint arise?

ASIC:

Information received from aggrieved person / complaints

Market intelligence / tools / monitoring

ASX and other referrals

Statutory reports of auditors / insolvency practitioners

ACCC:

Information from aggrieved person – complaints to ACCC hotline.

Newspaper reports

ACCC internal analysis

Referrals from international competition regulators


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ASIC & ACCC Investigations

Key initial questions:

Informal investigation – letter or phone call – no use of compulsive powers

Formal investigation – notification of investigation and use of compulsive powers

Important to determine if you are a target or a 3rd party from whom ASIC/ACCC seeks assistance.


How do the Regulators Investigate?

Disclosure of information

Production of documents

Access to premises

Provision of reasonable assistance

Search of premises and seizure of evidence

Examination of people


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ASIC Powers

ASIC – sections 30 and 33

ASIC may give a notice requiring the production of specified books relating to the affairs of a body corporate

Notice must specify:

matter being investigated and detail possible contravention(s) of sections of Corporations Act

books to be produced and time period

reasonable time for production

ASIC may also seek issuance of a search warrant (ss 35 and 36 ASIC Act) if non-compliance with s33 notice

Examination powers (s 19)

Failure to comply


ACCC Powers

Under section 155 ACCC can require:

Production of documents

Written responses to questions put by the ACCC

Individuals to attend an examination.

ACCC also has search, seizure and entry powers.


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Producing documents: What to do

Requirement to produce documents:

have a protocol in place / educate staff

get legal advice

don't under-produce nor over-produce

list and copy documents provided to regulator

read every document before handing over

assess/issue code

obligations to get documents from agents re possession and control


What to do (cont …)

Requirement to produce documents:

mask parts that are not relevant

notify third parties of fact that documents subject to confidentiality are to be disclosed

identify and assess any claims for legal professional privilege

analyse substantive provisions with which notice is concerned

Time for complying with notice:

negotiate extension and time for production prior to time for production – explain/substantiate why further time required

if extension is required seek it as early as possible, do not wait until the last minute.


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Examination of Persons

General comments:

Examinee to provide reasonable assistance

Examinations in private

Oath or affirmation for testimony

Lawyers for both parties can be present (but limits on what lawyers can do in examinations).

Examinee not to disclose questions put or answers given

Requirement to sign and adopt transcript



Examination of persons:

inform staff not to be drawn into informal interviews

extensively prepare persons for interviews

prepare chronology

go through all documents produced to regulator to determine if examinee is an author or recipient of any such documents. Ensure the examinee is familiar with all such documents and has discussed them with legal counsel.

prepare extensive questions and documents specific to each person

position of lawyer advising multiple examinees


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Approach and proactive measures:

pre-emptive or proactive meeting to explain? Timing for doing so

any settlement prospects?

consider strategies to minimise prospect of proceedings being issued (No Action Letter)


Miscellaneous

Notify insurers?

Cost recovery from principal?

Other


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Global considerations

Cross border investigations

Bribery

Competition

Corporate compliance

Tax

Anti-money laundering

Libor


Rapid Response

http://www.dlapiperrapidresponse.com/


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Gowri Kangeson

Partner

T: +61 3 9274 5428

E: [email protected]

Simon Uthmeyer

Partner

T: +61 3 9274 5470


Amelia Kelly

Partner

T: +61 2 9286 8412


Fleur Gibbons

Partner

T: +61 3 9274 5840


Kon Tsiakis

Partner

T: +61 3 9274 5224


Rani John

Partner

T: +61 2 9286 8220


Key Contacts


dealing with the regulators – the wrong way, the …...18/03/2015 1 dealing with the regulators...

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