ASIC To Investigate Commonwealth Bank “Life Insurance Scandal” (Aus)

Adele Ferguson reports that  “[t]he Australian Securities and Investments Commission will investigate allegations that the Commonwealth Bank’s life insurance arm is denying heart attack claims by deliberately using an outdated definition buried in the policy.”
She notes that the Senate has determined to include the “$44 billion life insurance industry” in its Scrutiny of Financial Advice inquiry.  Ferguson makes an argument for greater regulation of the sector: “The brutal reality is this code needs to be compulsory. Different insurers shouldn’t be allowed to use different definitions for medical conditions such as a severe heart attack or stroke and there should be a limit on how long it takes an insurer to process a claim. That’s for starters.”  The Four Corners episode is available here; and the ABC provides a who’s who here.

Criminalisation Of Chapter 7 Misconduct, Inadequacy Of Bank Bill Swap Rate Settlements, and New ASIC v ANZ Litigation (Aus – civil, criminal)

James Eyers for the Financial Review rounds up some of the issues currently brewing in Australian financial services regulation, noting ASIC’s calls for criminalisation of Corporations Act 2001 Chapter 7 (financial services) misconduct caused by a deficient corporate culture; comparing UBS’s settlements for its bank bill swap rate manipulation attempts ($1 million in Australia; $1.5 billion in England); and notes that ASIC, in rejecting ANZ’s proposed $50 million settlement for similar BBSW misconduct, and launching civil litigation in the Federal Court, appears to have hardened its stance in a short space of time.  Times, times are a-changin’.

ASIC warns investors about dealing with Market City International and Brokers500 (Aus – regulatory)

Here’s a nice example of complementary regulatory work: ASIC has published a warning to investors regarding certain companies it is satisfied have published false information and that “potential investors are likely to suffer detriment as a result of being misled“.

Regulators and Education – Sun, Salad, And Rotten Tomatoes (Aus – regulatory, criminal)

Another example of complementary regulatory work is provided this fortnight by SafeWork NSW. Its latest Wrap newsletter gives small business operators ideas to improve the sun protection of outdoor workers, and the general health and wellbeing of staff.  It also notes a recent prosecution for unsafe work practices on a tomato farm that resulted in the death of a 60-year-old employee.

Jail Sentence For Director Who Failed To Assist Liquidator (Aus – criminal – white collar)

Company liquidations can cause regulators (and creditors, and consumers) terrible headaches.  Here, ASIC prosecuted a “director of Middlebrook Estate Pty Ltd [who] has been sentenced  in the Adelaide Magistrates’ Court after pleading guilty to three charges brought by ASIC for failing to provide a Report as to Affairs and deliver books and records to the liquidator of the company.”

Prosecution Of Company Directors In Autralia

Researchers at the University of Melbourne have published a paper titled An Empirical Analysis of Public Enforcement of Directors’ Duties in Australia: Preliminary Findings.

According to the summary, “This paper presents the preliminary findings of an empirical analysis of sanctions imposed in proceedings brought by Australian Securities and Investments Commission (ASIC) and the Commonwealth Director of Public Prosecutions (CDPP) for contraventions of the directors’ duties provisions of the Corporations Act 2001 (Cth) and its predecessor, the Corporations Act 1989 (Cth), from 1 January 2005 to 31 December 2014. The preliminary findings presented in this paper indicate that criminal enforcement was more prevalent than civil enforcement and there was a significant emphasis on incapacitative sanctions such as prison sentences and management disqualification orders…”

United Kingdom

Clean Energy Company Fails To Provide Safe Workplace (UK)

The UK Health and Safety Executive prosecuted a Cornish company, Clean Earth Energy Limited, whose employee was installing solar panels when “the cement fibre sheeting he was walking on gave way and he fell approximately fifteen feet. He suffered multiple injuries including several fractured vertebrae.  An investigation by the Health and Safety Executive (HSE) into the incident … found the work was not properly planned or appropriately supervised.”  The Bodmin Magistrates’ Court imposed a £20,000 fine.

“Clapped Out” Sewerage Treatment Plant Despoils An “Area of Outstanding Natural Beauty” (UK)

Thames Water was fined a similar amount of money, for “lamentable” conditions at its sewerage treatment plant; the EPA noted “Our officers attended the site … and saw thick layers of sewage fungus carpeting the river bed and plants. One of the officers had never seen sewage fungus in a stream that bad before. A biological survey of the stream noted that the impact of the sewage was chronic and was likely to have been prevalent for some time.”

United States

It Pays To Blow That Whistle (In The USA, That Is) (USA)

Corporate Crime Reporter notes this fortnight that “[t]he Securities and Exchange Commission will award almost $2 million to three whistleblowers.

The largest of the three awards will go to a whistleblower who voluntarily provided original information that prompted the SEC to open its investigation.

That whistleblower, who will receive about $1.8 million, continued to provide valuable information throughout the investigation. …The SEC’s whistleblower program has now paid more than $57 million to 26 whistleblowers since the program’s inception in 2011.”

Homicide, Tampering With Evidence Charges (USA)

The US EPA reports in its latest bulletin that “ENVIRONMENTAL ENTERPRISES INC., an environmental services company and two of its managers were indicted by a Hamilton County Ohio grand jury in connection with a fire that resulted in the death of an employee. The indictment charges Environmental Enterprises Inc. with nine counts, including involuntary manslaughter, reckless homicide, tampering with records, tampering with evidence, and violating the terms of a solid waste license. The charges stem from a December 28, 2012, fire at the company’s Spring Grove Avenue facility that led to the death of a 20-year-old employee, Zachary Henzerling, who was treating hazardous waste at the facility and was burned when the fire ignited.”

German Shipping Companies Sentenced to Pay $1.5 Million for Illegally Discharging Oil into the Ocean (USA)

“The German shipping companies Briese Schiffahrts GmbH & Co. KG and Briese Schiffahrts GmbH & Co. KG MS “Extum,” who owned and operated the cargo ship M/V BBC Magellan, pleaded guilty today to failure to maintain an accurate oil record book, in violation of the Act to Prevent Pollution from Ships and tampering with witnesses by persuading them to provide false statements to the U.S. Coast Guard concerning a bypass hose on the vessel that was being used to discharge oil into the sea.”

Positive Regulation: EPA Climate Leadership Awards (USA)

This fortnight, we have an example of regulatory activity designed to build regulator-regulated relationships, educate and encourage positive commercial behaviour.

“Today, U.S. Environmental Protection Agency (EPA) recognized the Kimberly-Clark Corporation, …at the Climate Leadership Awards. Kimberly-Clark, among 17 winners nationwide, was honored for reducing global absolute greenhouse gas emissions by 6.9 percent from 2010 to 2014.

The Climate Leadership Awards recognize business and organization for managing and reducing greenhouse gas (GHG) emissions in internal operations and throughout the supply chain, as well as integrating climate resilience into their operating strategies. This is the fifth year of the annual Climate Leadership Awards, a partnership between the EPA’s Center for Corporate Climate Leadership, the Center for Climate and Energy Solutions (C2Es) and The Climate Registry (TCR).”