It’s Not Like ASIC Will Save You


ASIC, the regulator of the Australian financial system (and also the regulator of financial publishers like us), is on the receiving end of some remarkable criticism. It’s remarkable, not because of its content, but because of who it’s coming from. Usually, the customers complain about how big business shafted them. But things are so bad at the corporate regulator that even big business is up in arms.

The Australian Financial Review‘s Patrick Durkin put the story together very well. Here are our favourite bits:

Accounting firm BDO pointed to a specific confidential investigation they had carried out and referred to ASIC into the misconduct of an auditor which was never examined.

"Despite the extensive amount of work and costs involved in conducting the investigation, there would appear to have been no action taken by ASIC to investigate the matter," BDO national audit partner Tim Kendall said.

…judge and former head of the government’s prosecutors office, Justice Mark Weinberg [said] last week, that the regulator is too quick to sew up "secret deals" for light penalties with white collar criminals.

Secret deals with white collar criminals! Holy cow. At least they’re not murderous dictators in the Middle East though. Only central bankers have the guts for those kinds of business deals.

In the same article is about the best one liner we’ve read in a while: ‘ASIC released its annual report highlighting an increase in enforcement action, although the number of individuals jailed fell from 20 to nine.‘Priceless. Actually, it’s not. Unfortunately, entertainment like this costs a lot of tax dollars.

Instead of catching crims, ASIC is busy screening investors: ‘It will also outline their proposals for voluntary online assessments of investors, a push which was slammed by industry last year as a kind of "investor test".

It’s a novel concept. Instead of enforcing laws, only let clever people get defrauded.

The Americans have a different approach. Regulators there are preparing to bring in a rule that ‘stops banks from gambling with their own money‘says the AFR. They will only be allowed to gamble with other people’s money…

We’re increasingly coming to the conclusion that investing is all about avoiding fraudsters in the financial industry, not generating returns. Who cares what the stock market is doing if your CBA financial planner has invested your money in something completely different to what he told you? It’s not like ASIC will save you.

Part of the solution is to take charge yourself. Vern Gowdie has come up with a guide on how to do that with your Super.


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Nick Hubble
Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.

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2 years 11 months ago

Speaking of fraudsters in the financial industry, what can you tell us about the Chinese dumping 1000s of gold futures on the market to drive down prices to their own gain. (Slam-down, 11 Oct 13) And the program built into the exchange called ‘Stop Logic’ that introduces a momentary pause in matching (Reserved State) when triggered stops would cause the market to trade outside predefined values. The momentary pause provides an opportunity for additional bids or offers to be posted. In other words the market is rigged to keep prices stable.

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