While ASIC has the power to commence its own proceedings, it is also able to assist private litigants (or those contemplating litigation) by disclosing to them information within its possession.1 ASIC’s recently published Information Sheet 181 - Providing Information and documents to private litigants sets out how, and when, ASIC will disclose information it has obtained in the course of its regulatory work to private litigants. It is important, therefore, to understand how information held by ASIC may be disclosed to others.
To summarise, ASIC’s recent fact sheet indicates that:
- ASIC will provide copies of transcripts of examinations conducted by it to third parties, subject to certain considerations
- ASIC will disclose documents acquired by it through its compulsory information gathering powers where such information is to be used in a proceeding or investigation, subject to certain considerations
- while ASIC generally assists potential litigants by providing information it possesses to them, there are a number of general overarching limitations on any disclosure
- where ASIC has the discretion to disclose such information, those persons directly or materially adversely affected by such disclosure will generally be afforded an opportunity to be heard in relation to such disclosure, and
- there may be instances where ASIC is compelled to provide information to a court or tribunal. In such circumstances, ASIC will disclose the information (subject to certain restrictions). ASIC will give notice to parties affected by this disclosure, but will not seek their views on such disclosure.
When and what information will ASIC disclose to private litigants?
The Australian Securities and Investment Commission Act 2001 (ASIC Act)and the National Consumer Credit Protection Act 2009 give ASIC the power to provide certain types of information or documents to private litigants in certain circumstances. In particular, ASIC will provide copies of transcripts of examinations it has conducted, and related books,2 to a person’s lawyer, if the person is conducting a proceeding in a matter related to that examination.3 In determining whether to release such information, although ASIC will exercise a general discretion, it has indicated that it will consider whether:
- it is satisfied that the litigant is commencing a proceeding
- it is satisfied that the proceeding relates to a matter to which the examination relates
- an ASIC investigation or action would be jeopardised by the release of such information, and
- third parties or other people may be adversely affected by the release of such information.
Such information may be provided to private litigants subject to certain conditions, for example, limits on its use and further disclosure. ASIC may also delete portions of the text if it considers it to be confidential or unnecessary for the purpose of the litigation proposed.4 Unfortunately, it is unclear just how ‘related’ a matter must be before ASIC will release such information.5
ASIC may also permit documents acquired through its compulsory information gathering powers to be inspected or used in a proceeding. This includes any ‘books’ (including financial records, documents and ‘any other record of information’)6 that it has obtained under a compulsory notice or warrant.
In deciding whether to release such information, ASIC will:
- confirm how the books were obtained by it
- confirm that they are only to be used in a proceeding, and
- consider if any conditions should be imposed on their release – such as limits on their use and further disclosure.
ASIC has noted that when it discloses documents for use in proceedings, it will impose conditions similar to those set out in s 25(2) of the ASIC Act, which state that the person given the information must not use, copy, communicate the content of, or provide such documents to another person, except in connection with the preparation of, beginning and in the course of a proceeding.
ASIC does not have the same discretion when a person is authorised to inspect any books, such as a liquidator. ASIC must permit such an inspection to take place if the relevant books are in ASIC’s possession. In such circumstances, ASIC may not be able to apply the same limitations or conditions on such inspections or provision of documents.
What limits operate on disclosure to private litigants?
While ASIC has the power to disclose the information outlined above, it has stressed that such disclosure will be subject to certain limitations and procedural fairness requirements, depending on the circumstances.
ASIC will generally limit or deny the provision of information where:
- disclosing such information could compromise or prejudice ASIC’s own investigations or enforcement actions, or
- the information falls into one of the following specific categories:
- it is covered by legal professional privilege
- it is confidential or protected by some other legal requirement that limits to whom and for what purpose ASIC may disclose it
- it is considered ‘personal’, as defined in the Privacy Act 1988 (Cth), or
- it was provided to ASIC subject to terms that limit or prohibit its use or disclosure.
ASIC will also give consideration to whether:
- the proposed recipient of the information has the authority to receive it, and
- the purpose for which the information is to be used is an authorised purpose, for example under a legislative provision.
ASIC’s consideration of views before disclosure
ASIC stresses that where any information is released, it may impose conditions that limit the use, or further disclosure, of that information in appropriate circumstances. Generally, procedural fairness should be provided to any person directly or materially adversely affected. After hearing from such persons, ASIC will make a decision about disclosure.
Procedural fairness (the opportunity to be heard) should be provided in certain circumstances, where a person may be directly or materially adversely affected by the disclosure of certain information. Only after hearing from those persons potentially affected (for example, through written submissions on how ASIC should exercise its discretion) will ASIC make a decision about disclosure. This includes hearing from persons whose reputation or confidences could be adversely affected by such disclosure. This does not apply, however, if ASIC is compelled to disclose such information, such as under a court order.
ASIC has previously stated that where information is to be disclosed to other persons, how such procedural fairness will be made available will differ, depending on the effect on the person affected and the use or disclosure proposed to be made. ASIC’s view is that a person is entitled to procedural fairness where their reputation or confidences would be directly adversely affected by such disclosure. However, ASIC believes that procedural fairness does not oblige it to notify and hear from every person whose economic interests may be affected by a particular decision to disclose certain information.7
With regards to disclosing transcripts of examinations and related books to be used in proceedings by a third party, ASIC has indicated that any person adversely affected will be given the opportunity to make submissions to ASIC regarding:
- whether the pre-conditions for the release of the information have been satisfied
- the scope of the release, and
- what conditions, if any, should be imposed on the information’s disclosure, should ASIC decide to release the information. Should ASIC later relax any condition sought, this relaxation will be subject to the same procedural fairness requirements.8
Persons that are so affected will be entitled to receive all the information that is necessary in order to make their submissions. It is, of course, important to ensure that such submissions are crafted appropriately to deal with the considerations relevant to ASIC exercising its discretion and properly suggest appropriate limitations or restrictions.
In what other instances will ASIC disclose information in its possession?
ASIC, like other persons, will need to provide information to a court or tribunal when it is compelled to do so, such as responding to a subpoena or summons. When responding to a subpoena, some but not all of the limitations outlined above will apply, however, the final decision maker in such cases is the court. ASIC must also produce documents to a court when responding to a notice requiring non-party discovery or a notice to produce. These documents must be ‘directly relevant’ to an allegation in a case being conducted by a third party or ASIC. ASIC must produce the documents required by the notice within the required period of time.
ASIC stresses that where it is compelled to provide information, it will not be releasing the information at its own discretion – and as such, it will not afford procedural fairness. However, it will ordinarily give notice of the information’s disclosure to those affected, before it is used in court, to enable such persons to take whatever action necessary to protect their interests, such as making their own application to the court in relation to the disclosure of such information to other parties.9