Here are the five things you should know happened this fortnight.
A busy fortnight for our top market regulator. Its civil pecuniary penalty litigation against three of the big four banks for manipulation of the BBSW has been stalled following last-minute settlements with ANZ and NAB. Apparently Westpac will continue to trial: great news for those who want the contentious issues – and ASIC’s aptitude – tested in open court. Not such great news for the public purse, if the bank prevails – though Medcraft has already flagged the possibility of an appeal. Nothing formal from the ASIC, but reporting by the ABC and the AFR (paywalled).
Meanwhile current ASIC chairperson Greg Medcraft will be stepping down on 12 November 2017; Mr Peter Kell will act in the role until a formal appointment is made in February next year. The Government announced this fortnight it will recommend James Shipton for the role. Messrs Kell and Shipton will no doubt be reviewing the ASIC Enforcement Review Taskforce position paper ‘Strengthening Penalties for Corporate and Financial Sector Misconduct‘ released this fortnight with interest. Let’s hope the taskforce – and the future chairpersons – have read Comino’s excellent 2015 research on the regulator’s challenges Australia’s “company law watchdog” : ASIC and corporate regulation.
Justice Deferred is the Justice Preferred?
The international conversation on the proper place and use of deferred prosecution agreements continues. Canada is currently consulting on whether to introduce DPAs to address corporate crime. (Submissions close 17 November 2017). In the US, Arlen and Alexander have published research suggesting that ‘convictions don’t matter’ when it comes to reputational damage associated with corporate crime prosecutions and DPAs – controversial because the idea that conviction is meaningful is an axiom on which much regulatory theory is built. For state-based Australian regulators, these debates might seem purely academic. But the themes and considerations are relevant to the choice most regulators have between entry into enforceable undertakings or prosecution, and to some extent are also relevant to the peculiar choice more and more regulators have between civil pecuniary penalty litigation and prosecution.
The Pain Killers
The US president has now declared the opioid crisis a “public health emergency”. Litigation against opioid manufacturers has been trickling through US courts for many years, but has gathered serious momentum this year. The New Yorker’s Patrick Raden Keefe provides this portrait of the family who built up Perdue Pharma, the company arguably at the centre of the storm; a cautionary tale of regulatory capture, among other things. Esquire’s dim view of the family and its legacy is here.
Bloomberg , Fortune and The Atlantic all provide useful overviews of the current litigation. The US DOJ has determined to focus its efforts on prosecuting individuals who ‘misprescribe’ opioids, while the US Congress Committee on Oversight and Government Reform has asked the US Attorney General to explain why the Justice Department’s Drug Enforcement Administration’s prosecutions under controlled substance laws have “decreased as the number of American deaths has increased”. A few days after this demand was sent, Scott Higham and Lenny Bernstein argued in The Washington Post that part of the blame lay at their own feet: “[a]mid a targeted lobbying effort, Congress weakened the DEA’s ability to go after drug distributors”. Or watch the 60 Minutes coverage here.
All this litigation has, apparently, prompted opioid manufacturers’ push into new markets abroad (particularly into less- or un-regulated markets). If regulation of multinational behaviour from a human rights perspective interests you, you may be pleased to hear the third session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights has just concluded. You can review the report of proceedings here.
Industrial Manslaughter in the Sunshine State
The Queensland government has passed the Work Health and Safety and Other Legislation Amendment Bill 2017. Among other things, it introduces an offence of industrial manslaughter to the Work Health and Safety Act 2011, and curiously, establishes an independent prosecutor to conduct summary WHS prosecutions; indictable prosecutions will continue to be referred to the DPP. The laws were proposed in response to last year’s fatalities at Eagle Farm Racecourse, and on the Thunder River Rapids ride at Dreamworld.
It’s always hard to narrow down the litigation worth mentioning, but this fortnight, the following stood out. On our own shores, “The Federal Court has granted leave to investors in the class action brought against S&P by global law firm Squire Patton Boggs to pursue a tort of deceit claim against S&P over the way it rated a type of structured investment product known as synthetic collateralised debt obligations.”
In the US, the SEC has charged “Rio Tinto and two former top executives with fraud for inflating the value of coal assets acquired for $3.7 billion and sold a few years later for $50 million.” Unfortunately for the plaintiffs in the J&J talcum powder litigation, one of the verdicts has been reversed due to jurisdictional problems; but good news for General Motors Company, which has been able to settle some more of its ignition-switch litigation for $120M.
And don’t forget…
Treasury has now released the exposure draft of the Treasury Laws Amendment (Whistleblowers) Bill 2017 and supporting explanatory material: comments close 3 November 2017.
And… there’s now a fine pile of regulator annual statements for your review and reading pleasure. ASIC’s regulator performance self-assessment here; IBAC’s annual statement here; ASIC’s annual report here; ACCC’s annual report (and new logo) here. Also see: APRA; WorkSafe Victoria; EPA Victoria; Telecommunications Industry Ombudsman and Fair Work Ombudsman.