For once, a little support from the media:-
http://www.smh.com.au/business/senate-probe-bodes-badly-for-asic-20091129-jyy1.html
"... The role of ASIC also needs to be examined. In many of the big collapses, ASIC was warned well in advance of concerning issues but appears to have done nothing, and in smaller cases,
when a company was put into administration, it also turned a blind eye. ..."
"... Meanwhile,
the carcass is being ripped apart, and if ASIC eventually decides to investigate, the case will be cold and the damage already done. ..."
The descriptor 'undertaker' sits well with ASIC - as
The US have their problems too - the SEC is not unlike ASIC:-
http://curiouscapitalist.blogs.time.com/2008/12/18/harry-markopolos-really-did-have-the-goods-on-bernie-madoff/
Even accusations of 'turning a blind eye':-
"... After the revelation of a massive fraud scheme,
a former government investigator has accused government law enforcement officials of repeatedly turning a blind eye to Wall Street crime and, in doing so, allowing the foundational trust of the global financial system to crumble. ..."
The following in an (edited) email I sent to Ruth Williams at businessday on 10 August 2009 in relation to her article on 8 August 2009
http://www.theage.com.au/business/asic-calls-for-a-debate-on-its-role-20090807-ed17.html
As expected, I didn't get a reply.
http://www.watchdog.asic.gov.au/fido/fido.nsf/byheadline/Complaining+about+companies+or+people+FIDO+version?openDocument
ASIC's website states (in part) "... If you cannot resolve the problem with them, or if your complaint is about misconduct or illegal activity by a company or person, then ASIC may be one of a number of government and non-government organizations able to help you. ..."
I think that ASIC confuses investors' expectations that "ASIC will investigate matters of concern and will act on complaints", or as it holds out that it will. However, when many complaints were made to ASIC about City Pacific, ASIC replied back, that investors' losses related to "investors' prudential choices" rather than taking our complaints seriously.
Clearly, Mr. D'Aloisio thinks that "... At the end of the day, we (ASIC) are responsible for oversight and as the supervisor of the markets - we (ASIC) are not a guarantor of last resort. ...". This excerpt from your article clearly shows the dichotomy of views of ASIC's role with respect to regulation viz-a-viz the regulator and investors: Investors don't see ASIC as the 'guarantor' of last resort, I think it's more that ASIC thinks that investors see ASIC in that role.
This following excerpt discloses ASIC's lack of understanding of the market - "... we think the efficiency of the market will deliver such benefits that offsets the need for regulation ...". Could it be that ASIC doesn't believe that there are bad guys out there who are willing to fill their bags of gold at investors' expense?
Mr. D'Aloisio stated (in part) "... Because of what we've seen and the losses to investors, should we be turning the dial to more protection, and taking the risk that that might make the markets less efficient, and could marginally add to cost [of] capital? ...". I just wonder which planet he must have been on when he made this statement? Clearly ASIC had the 'dial' set where it expected investors losses in favour of an 'efficient market', so it should have been of no surprise to them to see the failures of recent months. Investors should be aghast that such a statement was made at all - I'd guess that it's not what they would have expected to hear.
"... What else could we have done? What should we have done? What did we miss?'' ...". Well, I think that ASIC could have properly acted on investor's complaints and given proper and timely feedback with respect to those complaints. ASIC should have been proactive and acted at the soonest possible opportunity to protect investors as it promised as Fido at
www.watchdog.asic.gov.au. ASIC should have looked at the substance of a company's behavior (what is was really doing) rather than its 'form' (that is, that the right forms are filled out etc.)
It is interesting to note the following two transcripts from an interview on 60 minutes (USA) by Mr. Harry Markopolous. Mr. Markopolous tried on 7 occasions between 2000 and 2008 to have the U.S. S.E.C. investigate Bernie Madoff.
(1)
http://www.youtube.com/watch?v=E_AT...ymagik.com/others.php&feature=player_embedded
Q. So, if they're not trained at securities work, then what are they trained at? --- A. How to look at pieces of paper that the securities laws require. They can check every piece of paper perfectly and find misdemeanors and they'll miss all the financial felonies that are occurring because they never look there. Even when pointed to fraud, they're incapable of finding fraud.
(2)
http://www.youtube.com/watch?v=-g3V...ymagik.com/others.php&feature=player_embedded
Q. So he turned himself in before anyone in authority began a serious investigation? A.
That's typically how the SEC does it. They come in after the crime has been committed, they toe-tag the victims, count the bodies, and try to find out who the crooks were after the fact, which does none of us any good.
I consider that Australian investors' experiences have not deviated from U.S. investors' experiences . We have each been badly let down by the very ones in which we placed so much of our trust. No one expected that the regulators would be no more than '
corporate undertakers'.
In my view, it has been (a) ASIC's defective view that investors lose money based solely on their respective prudential choices rather than attempting to believe that there are really bad guys out there, together with (b) ASIC's obsession for 'form' over 'substance' that has caused serious damage to both investors' wealth and investors' confidence in the Australian financial markets.