The offender was sentenced following pleas of guilty to 18 counts of not ensuring defective disclosure notified to distributor contrary to s 102J(1) of the Corporations Act 2001 (Cth).
Nature and Circumstances: Over an approximately 28-month period, offender was aware that its disclosure documents contained misleading statements and omitted information about its practice of continuing to deduct and remit fees from its members’ accounts following the death of the member. Despite offender knowing of the defect and it being clearly practicable to have taken reasonable steps to remedy the defect, they continued to charge fees after being informed of an investor’s death and did so for some 28 months, resulting in 499 deceased members having fees deducted from their accounts. In all the circumstances, the offending can only be described as a very serious failure of corporate governance and an example of a financial corporation putting its own interests above those of its investors in breach of the law. In all the circumstances it is a serious example of corporate offending and the company’s culpability is relatively high.
Cooperation: Offender self-reported to ASIC and APRA, pursuant to its obligations under the Act. Once an investigation had commenced, offender produced relevant documents without resistance and without claiming any privileges. Offender continued to consult with ASIC as to its remediation methodology in relation to the affected victims by providing regular updates on the status of the remediation program.
Contrition: ASIC will seek the costs of the investigation from the offender which are in the order of $1.3 million. The fact that the offender is willing to pay the ASIC costs is further demonstration of the company’s acceptance of responsibility and its contrition. The parties agree this is a matter to be taken into account in arriving at the appropriate penalty.
General Deterrence: General deterrence is the paramount sentencing consideration in this instance. The failure to correct the defect for some 28 months calls for a penalty that sends a message to the market that this kind of procrastination will not be tolerated, particularly in a trusted and well-resourced company that was a subsidiary of one of Australia’s largest banks. While the conduct of the company was not pursued as a matter of strategy, offending nonetheless represents a high level of objective gravity and general deterrence must weigh heavily in the sentencing calculus.
Offender sentenced to a fine of $1,710,000. If not for the plea of guilty offender would have been fined $2,700,000.
