a top submission ( whistleblower?), page-3

P2

Whilst working at ASIC’s media unit it was apparent that ASIC received frequent complaints about dodgy and suspect investment schemes as well as lost investments in failed companies. These complaints were dutifully logged and filed. Their recording was methodical. The records were well kept. But that is where too many complaints remained – buried in the archives. It was only when the volume of complaints and losses about a particular scam reached tsunami level, or investors with losses contacted a member of parliament, or triggered a media inquiry that ASIC seemed to spring into action. At one point it took a government minister’s wife to lose a sum in a property fund to get ASIC to start an investigation into that fund. When small investors lost money ASIC seemed incapable of action or didn’t think it necessary. However, if a corporation or big fish reported a trading irregularity, backsides came off their seats quickly. I will have more to say about that later.
While at ASIC I sat at meeting after meeting where the same investor-related concerns would come up for discussion without any sign of progress in the investigation, or action. The matter simply moved from one agenda to the next. The decision to do something seemed to be too difficult or perceived to be too risky. It seemed to me that those at the top who should have been making decisions to act thought it safer to avoid making a decision than to make one that might be later criticised in either a courtroom or in Canberra.
Some at the top of the ASIC structure considered that the best way to protect mum and dad investors was to tell them that they are responsible for the safety of their investments and that it is not ASIC’s job to protect them. Instead small investors should take the time to educate themselves about investment risks and take responsibility for their investment decisions. It was said that investors should realise that if the return sounds too good to be true then it is and investors needed to be less greedy searching for high returns. If they took this course of action then they wouldn’t be in the mess they were in. In short they should pay more attention to what they were investing in and if they took risks then they had to bear the consequences. ASIC should not be looked on as a protector of their savings, nor as a chaser of the rogues who took their money. The attitude frankly floored me. The situation could only have become worse in the past few years with thousands of new self managed super funds set up every week by people who don’t understand investment principles, risk and reward and and who are sitting ducks for manipulation and scamming by rogue advisors and bad product peddlers.
Whilst I worked at ASIC I had nothing but the highest regard for the committed and hard- working investigators and lawyers in the enforcement section of ASIC. But there seemed to be some blockage at the top. Action seemed always to be taken too late. Negotiating enforceable undertakings rather than taking people or companies to court was a preferred course of action when complaints reached a crescendo. These undertakings were discussed and fought over, over months, by armies of lawyers in secret behind closed doors and few details ever emerged about how the damage to investors was done, how many investors were affected, or even whether the undertaking was adhered to. In some cases the companies involved undertook to write letters to affected clients asking them to come in and discuss their concerns. Whether these letters were sent, how they were worded, whether they were replied to or what compensation was offered stayed secret. Everything seemed to go silent after a brief but meticulously crafted press announcement was released by ASIC.