Transcript: ASIC
VIEW, Episode 1 – Tim Mullaly, Financial Services Enforcement
Host: Hello and welcome to the official ASIC
podcast, where we'll be giving you an insight into the type of work we're
doing, and the issues we confront every day at the corporate regulator. My name
is Andrew Williams and my guest today is Tim Mullaly, Senior Executive Leader,
Financial Services Enforcement at the Australian Securities and Investments
Commission. Tim, thanks for joining me on this episode of the podcast.
Tim Mullaly: Thanks
Andrew.
Host: Tell us a
little bit about your position at ASIC and what that involves on a day-to-day
basis.
TM: Well, Andrew, as
you said, I'm the Senior Executive Leader for Financial Services Enforcement.
So that's financial advisers, and the licensees that they work for. It includes
credit providers and credit intermediaries. We look at matters concerning
superannuation trustees, managed investment schemes, insurance, banking,
foreign exchange licensees, so quite a large range of industries we cover. And
we also look at people that operate in these industries but are not licensed,
so the unlicensed entities as well.
Host: So pretty much
anything that involves someone's money, you are enforcing that people aren't
doing the wrong thing.
TM: We are, we are.
That's what we're looking to do.
Host: So how does
that work for you on a day-to-day – what does a regular day in your work life
look like?
TM: Lots of
administrative functions, so I need to squeeze those in, but I provide the
overall strategy and direction for the investigations that are underway within
my team – I do that of course in consultation with my senior managers and my
senior executive that reports through to me, so it's certainly not something
that just I look after, I have a really competent and excellent team around me.
It can include making decisions about what matters we'll investigate and what
matters we might not be able to investigate. We look at settling the scope of
our investigations, so what's in and what isn't. We make decisions on the
matters and how they might be run in terms of the investigations and also
importantly in terms of the litigation. And we make decision perhaps around how
we might settle matters – what the terms of a settlement will be. I'm also involved
in decisions around the potential criminal charges that ASIC might want to
bring in relation to particular breaches. So it's quite a wide range of
decisions that need to be made on a day-to-day basis and an hour-by-hour basis
in relation to it. You know, currently we have somewhere around 150
investigations underway at the moment, so, there's a lot of things that need to
be considered, and as I say, it doesn't happen unless you've got a really good
team around you and I do.
Host: How big is your
team, how many staff are in the Financial Services Enforcement area?
Tim: Yeah, it can
vary because with litigation, sometimes
you need to get large numbers of, say, paralegals in to assist, so it ranges
around about 80-120 at any point in time, and at the moment I think it's a bit
closer to the 120 than the 80.
Host: And what's the
primary goal for you and your team? Essentially, when you boil it down, what
are you trying to achieve?
TM: Look, you know,
at a high level what we're trying to achieve is really to support the
priorities of ASIC. So that's to ensure that there's investor and financial
consumer trust and confidence, and ensuring that there are fair, orderly and
transparent markets. So that's the primary aim, and we do that by bringing
investigations and litigation in respect of breaches of the laws that ASIC
regulates, and ensuring where there are breaches, that there are enforcement
outcomes that are targeted towards those breaches.
Host: Tell us about
some of the ways that you've gone about achieving those aims. Obviously, there
are a lot of cases that ASIC undertakes, there are a lot of different kinds of
cases that you're dealing with – what are some of the methods that you're using
to try and get results?
TM: Andrew, our
investigation teams are made up of highly skilled staff that understand the
industries that we regulate, and are really innovative in their approaches to
the investigations, so they get the right information and they make the right
decisions. We utilise a full range of our powers and remedies in our
investigations, so that's compulsory powers to get information, documents, also
examinations of people that might provide us with information, so we exercise
all those powers, we do a lot of voluntary interviews with people, particularly
with consumers that may have lost money to understand the circumstance around
that; we operate hopefully in a really innovative and flexible way, but always
we operate within the terms of the law.
Host: Mm. You have to
be more innovative and flexible, don't you, because this is a rapidly changing
world, technology has made, I guess, ASIC's job a lot more complex.
TM: It's made it a
lot more complex, it means there's a lot more information available to us, in
the, for want of a better term, the good old days, when it was all paper-based,
there was never quite the amount of information that there is these days. So,
these days you're looking at e-mail servers that contain hundreds of thousands
of documents that you need to search through. So, our staff do need to be
flexible, they do need to be innovative in their investigations, we need to
have a lot of support from our IT people so that we can sift through all this
information and make sure that we're targeting, really carefully, the important
stuff, so that we can make the right decisions
Host: How much work
is involved in getting a case from start to finish? I know that, like you say,
they're becoming ever more complex – how much work is involved in getting
something, not even to the finish line, but just to the case where sometimes
it's going to court?
TM: Andrew,
investigations are almost always complex – there's some that aren't, but some
are a lot more complex than others. So where there's a major collapse of an
entity, such as there was with, say, Opus Prime a few years ago, there was a
wide range of matters that we needed to investigate in relation to that. We
needed to look at compensation of clients, we had to investigate the ANZ bank
and that resulted in an Enforceable Undertaking with them, we investigated the
directors and that resulted in two of the directors pleading guilty, and a
third director being charged with offenses but being found not guilty after a
trial, and that trial was some five years or so after the investigation
commenced. There was a range of market-related issues involved in that
particular collapse and out of those we identified some insider trading by
another person, and those criminal charges are still going through the courts
as we speak. The amount of documents involved in that was substantial, you
know, as I said earlier, there's just so much volume of information that you
need to go through – a lot of very complex legal issues arise in relation to it
– a lot of novel issues arise that haven't necessarily been dealt with before.
The investigation team has to work through all of that in a very co-ordinated
way, but under quite a deal of time pressure, particularly in relation to
compensation type issues, where the investors want to get their money back, or
get some money back as quickly as possible.
So that particular
investigation possibly at times had a team of 70 on itself, so very large, very
complex matters. There are other, smaller matters, where we might be looking to
ban someone from an industry, and it might be a one or two person job, and they
might be done and dusted within six weeks. So those matters might not be as
complex, but they're still important.
Host: Absolutely. How
do you decide - and you're probably only going to be able to speak to this to
an extent, and it's a question without notice - but how do you decide what cases to take and
what not to take? Do you have driving principles that kind of guide you there?
TM: We do have issues
that guide us around whether or not we might take something on. We always look
at what evidence is available, and what evidence we think might be available.
For example, if a matter we came across indicated that all the evidence was
offshore, so another overseas jurisdiction, you know, that might be one factor
that would be against us taking it on. It's not to say that we wouldn't, but it
would be a factor pointing away from that. We look at the market impact of the
conduct – is it something that's having quite a big impact on the market –
though there can be some matters that might not have such an impact, and again,
those might be matters where, all things being equal, we don't take on. We look
to see if there's any other regulatory body, or enforcement body, that's more suited
to take the action, so, it might be that it's better that one of our
co-regulators like the ACCC or APRA take the matter on. We look to see whether
it's within our current strategic priorities and business planning projects,
and if it is, we're more likely to take it on. So there's a range of factors. We
also look at whether we're going to get an outcome that is good bang for the
buck, so we look at how much it might cost us to undertake the investigation,
and whether we might get an outcome that's commensurate with that cost.
Host: Absolutely. We
were talking about some of the challenges in the way that the world is
changing, technology is changing what you do – what are some of the other big
issues that are confronting you and your team at the moment?
TM: Well, look,
innovation and disruptive technologies are really quite big in the financial
services area. So things like robo-advice, peer-to-peer lending, crowdsourced
equity funding – those things are new, they're having a lot of traction in the
market at the moment – ASIC is, not just enforcement within ASIC, but ASIC
overall is looking at the ways that we should and can regulate, and these are
some fairly tricky issues – ASIC wants to be able to enable innovation, but it
also needs to make sure that it's done with consumer protection in mind.
Host: What's the most
– on a more positive note – what's the most satisfying moment you've had during
your tenure at ASIC?
TM: Look, I think
whenever you win a case, that's satisfying, and particularly those complex
cases. What I always say is ASIC's made up of fantastically smart, intelligent
lawyers and investigators and accountants and analysts, and when they all pull
together to bring a case to court and you get the outcome that you expect,
that's immensely satisfying.
Host: Tim, pleasure
speaking with you, thanks so much for your time on this episode of the podcast.
TM: Thanks Andrew.
Host: We'll hope to
bring you many more stories from and about ASIC staff in the weeks to come.
Thanks for listening.