HSBC Bank Australia Enters Enforceable Undertaking (Aus – civil)

“ASIC has accepted an enforceable undertaking (EU) from HSBC Bank Australia Ltd (HSBC) that requires HSBC to review and remediate clients who received potentially deficient advice on retail structured products between January 2009 and March 2013.  The EU follows a proactive ASIC surveillance of HSBC’s advice on retail structured products which found instances where advisers had obtained little or no information about clients’ relevant personal circumstances and raised concerns that advice may not have been appropriate for the clients’ circumstances or needs … As a result, ASIC was concerned that HSBC may have failed to comply with certain obligations under the Corporations Act and HSBC’s Australian financial services licence.”

Colgate-Palmolive Washes Up $18M in pecuniary penalties (Aus – civil)

The Federal Court’s decision in the ACCC laundry detergent litigation was published this week; among the orders were $18M in pecuniary penalties.  The Court describes its process in determining whether to accept the proposed penalties; similarly, the Court’s assessment of appropriate penalties, post-FairWork v CFMEU is described in the judgment of ACCC v Cement Australia.

ACCC To Enforce New Surcharge Rules (Aus – regulatory)

“The Australian Competition and Consumer Commission will begin enforcing the ban on excessive surcharges for large merchants on 1 September 2016.  Earlier today, the Reserve Bank of Australia Payments System Board (PSB) published its Standard which relates to surcharges by merchants when charging customers for the use of a credit or debit card. Surcharges will be excessive where they exceed the permitted cost of acceptance, as defined in the Standard. “In short, the new provisions will limit the amount businesses can surcharge customers for use of payment methods such as most credit and debit cards. The limit will be linked to the direct costs of the payment method such as bank fees and terminal costs,” ACCC Chairman Rod Sims said.”

Recent Journal Articles (Global)

Brandon L. Garrett, ‘The Rise of Bank Prosecutions, (2016) 126 Yale Law Journal Forum 33  (Text available here)  An excerpt from the Introduction: “In this Essay, I describe the remarkable rise in the number of bank prosecutions in recent years, as well as the still steeper rise in criminal penalties imposed on banks. 2015 was the year that bank prosecutions finally came into their own, both in the record-breaking size of the fines and in the numbers of cases resolved. While the DOJ can claim marked achievements in recent years, which I detail here, I nevertheless caution against treating these data as fully answering critics’ concerns. Despite the apparent rise of bank prosecutions, important “too big to jail” concerns remain…”

Tania Murray, Dr Edward Andre and Krishna Prasad, ‘Holding fracking operations to account for environmental contamination in risk-based regulatory regimes: Insights from the United States, (2016) 33 (3) Environment And Planning Law Journal 222.  Summary here.

Diana Nestorovska, ‘Assessing the effectiveness of ASIC’s accountability framework, (2016) 34 (3) Company And Securities Law Journal 193.  Summary here.

Johnson & Johnson Sued Over Horrific Pelvic Mesh: “This is an unacceptable way of doing business, and I will hold the company accountable” – Washington A-G  (USA) 

So I guess giving boys breasts wasn’t enough to make J&J changes its ways. (Why would it?  The conduct was, apparently, ultimately profitable.)  This time, it’s vaginas suffering.   The State of Washington has initiated civil litigation against J&J, alleging it failed to disclose to doctors, among other things, the following information about its pelvic mesh: “the presence of polypropylene in the body and the process of implanting mesh through the vagina could cause severe and unavoidable complications.   These unavoidable lifelong complications include for example, permanent loss of sexual function, painful sexual intercourse, near impossibility of removal of the device when complications arise, permanent urinary dysfunction, lifelong risk of infection, and chronic pelvic pain. Defendants knew these complications are caused by the design and placement of the mesh and cannot be avoided by good surgical technique alone.”

The State of Washington further argues (at 1.7 of the Complaint) that “Despite Defendants’ knowledge of these complications, Defendants’ informational and marketing materials misrepresented the safety and effectiveness of their products and omitted known serious risks and complications. Defendants’ campaign of deception caused thousands of women in Washington to unknowingly take risks with their bodies. Defendants’ conduct deprived doctors and patients of the information necessary to make informed decisions regarding Defendants’ products.”

All-American Pipeline Oilspill Results in All-American Indictment (USA)

Plains All-American Pipeline has been indicted by a grand jury on 46 criminal charges related to the May 2015 oil spill in Santa Barbara County.  “The company was charged with felony violations of state laws regarding the spilling of oil and hazardous substances into state water…  [and] misdemeanor violations for failing to provide timely notice of the oil spill to the Office of Emergency Services.  In addition, the company was indicted on three dozen misdemeanor charges linked to the spill’s impact on birds and mammals.”

The company responded, saying, among other things, “[w]e will vigorously defend ourselves against these charges and are confident we will demonstrate that the charges have no merit and represent an inappropriate attempt to criminalize an unfortunate accident.”

(The grand jury system is not used in Australia, but procedurally is roughly equivalent to a committal hearing.  An important difference is that the Australian committal hearing is determined by a magistrate, not a jury.)

US Whistleblower Program Goes From Strength To Strength (USA)

The Securities and Exchange Commission today announced that it will award between $5 million and $6 million to a former company insider whose detailed tip led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information. …Today’s award is the SEC’s third highest to a whistleblower.  In September 2014, the agency announced a more than $30 million whistleblower award, exceeding the prior highest award of more than $14 million announced in October 2013.  Since the inception of the whistleblower program in 2011, the SEC has awarded more than $67 million to 29 whistleblowers, including one for more than $3.5 million announced last week.”
“The whistleblower program has seen tremendous growth since its inception and we anticipate the continued issuance of significant whistleblower awards in the months and years to come,” said Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower.”

Oaxaca Mexican Products Cited For Serious Workplace Failures (USA)

The US Dept of Labor has issued citations (a citation is roughly equivalent to an infringement notice here in Australia) to Oaxaca Mexican Products for a range of very serious OHS failures, including a blocked fire exit, fall hazards, lack of machine guarding, lack of eye-wash facilities where employees use corrosive chemicals, etc.  The fines total $112,000.  This is the second time the regulator has cited the company for a blocked fire exit ( the door and route had locking devices requiring special knowledge and tools to open in case of emergency). The fines seem, at first glance, minuscule, for such serious conduct, particularly for a repeat offender.  But it is impossible to judge the quality of the fine without information about the company and other sentencing considerations.  Artificially, however, the rhetoric in Australia about the outcome of OHS crime not affecting sentence (save for the mandatory observance of victim impact), doesn’t seem to hold in the US.  At least, this set of citations suggests there may be a different approach there, given the very serious risks presented by the conduct, and the apparently small size of the fines.

US Chamber Institute for Legal Reform Critiques the State of US Regulatory Enforcement (USA)

The US Chamber Institute for Legal Reform published two papers this fortnight: Challenges Posed By The Yates Memo and USAM Reforms and The Many Faces of Over-Enforcement In the United States.  The ILR describes itself in these terms: “The U.S. Chamber Institute for Legal Reform (ILR) is the country’s most influential and successful advocate for civil justice reform, both in the U.S. and abroad.  While the U.S. has the greatest legal system in the world, in some cases the courts have been hijacked by players who abuse the system.”  Greatest legal system in the world, eh?

American Capitalism’s Great Crisis (USA)

Rana Foroohar writes for Time this fortnight, that the phenomenon of financialisation is a problem for the US.  Included within that problem is the changing role and motivations of the corporation within the US economy.

And Now For Something Completely Different: Archeologists and VR Gamers Team Up To Assist Jurors Visit Crimescenes (EU-criminal)

From the Centre For Archaeology: “Researchers from Staffordshire University’s Centre of Archaeology and Forensic and Crime Science department have been awarded a prestigious research grant to develop new ways to record and present crimes scenes via virtual reality.

Dr Caroline Sturdy Colls will lead the project which will develop and apply novel digital recording methods from archaeology and games technology to complex criminal investigations. …The project, funded by a 182.000 Euro EU Marie Sklodowska-Curie grant, will aim to change the way in which buried and concealed evidence is analysed at crime scenes through these new techniques and through an associated programme of training and support for specialists and professionals working in this area.”

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